Kalikow v O'Connor Manhattan House Lawsuit Documents

Here are three links to documents pertaining to the Kalikow v O'Connor Manhattan House lawsuits

Main complaint - this is a 129 page document and will take several minutes to download

Memo in support of preliminary injunctions - 54 pages

Memo in opposition to motions for a preliminary injunctions - 18 pages

Manhattan House In-Fighting Leads to Fitch Downgrade

June 19, 2007 03:55 PM Eastern Daylight Time
Fitch Downgrades 2 Classes of CSFB 2005-CND2

CHICAGO--(BUSINESS WIRE)--Fitch Ratings downgrades and removes from Rating Watch Negative the following classes of Credit Suisse First Boston's (CSFB) commercial mortgage pass-through certificates, series 2005-CND2:

--$23 million class M to 'BB' from 'BBB-';

--$18.8 million class N to 'BB-' from 'BBB-'.

In addition, Fitch affirms the following classes:

--$375.4 million class A-2 at 'AAA';

--Interest-only class A-X-1 at 'AAA';

--Interest-only class A-X-2 at 'AAA';

--Interest-only class A-X-3 at 'AAA';

--Interest-only class A-X-4 at 'AAA';

--Interest-only class A-X-5 at 'AAA';

--Interest-only class A-Y at 'AAA';

--$64 million class B at 'AAA';

--$63 million class C at 'AA';

--$39 million class D at 'AA';

--$36 million class E at 'AA-';

--$35 million class F at 'A+';

--$37 million class G at 'A';

--$33 million class H at 'A-';

--$36 million class J at BBB+';

--$32 million class K at 'BBB';

--$32 million class L at 'BBB-'.

Classes A-1, A-1S, and A-1J have been paid in full.

As of the June 2007 remittance date, the transaction's principal balance had decreased by 58.6% to $824.3 million from $2 billion at issuance due to the payment in full of twelve loans. Eight loans remain in the transaction. Five are secured by multifamily rental properties that are undergoing conversion to individual condominiums. Three loans are secured by multifamily properties with cancelled condominium conversions. All loans are current, and none are specially-serviced. There have been no losses to the trust.

The downgrades are due to several Fitch concerns about the transaction's remaining loans; upcoming 2007 maturity dates, geographic concentration (all of the remaining loans are secured by properties in either New York or Florida), concentration by size (the five largest loans comprise 90.1% of the transaction), oversupply in various Florida condominium markets, and delays at the largest loan in the transaction - Manhattan House (54.6%). All of the loans mature in 2007.

Four (17.8%) of the eight remaining loans are in Florida. Three of the loans in Florida are secured by multifamily properties that are no longer being converted to condos: Mizner Court (7%), Spring Harbor (4.6%) and Spring Landing (3.8%). All three are being re-leased as rental properties. Fitch is concerned that they do not generate sufficient cash flows as rentals to support their current debt levels, and as a result the loans no longer maintain investment-grade credit assessments.

The Manhattan House loan is secured by a 583-unit multifamily rental building located on the Upper East Side of Manhattan, New York. As of the June 2007 remittance, there had been no sales or contracts signed for any of the units. Fitch is monitoring the ongoing status of litigation between the partners and its impact on the loan's performance.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Battle for Manhattan House Heats Up

June 17, 2007
by Braden Keil
New York Post

It's not just the tenants who are allegedly getting booted from their market-rate apartments at Manhattan House. Now it's the new owners who are trying to evict each other.

Jeremiah O'Connor and Richard Kalikow, who are in the midst of the city's costliest condo conversion - at a reported $1.1 billion - have taken their skirmish to Manhattan Supreme Court, where a judge has determined that either man must buy the other one out in 30 days.

At stake is a five-building, 20-story complex, where Grace Kelly once resided, which encompasses an entire city block between Second and Third avenues and East 65th and 66th streets. The two moguls bought it in October 2005.

The two paid $623 million - more than $1 million per apartment - and received nearly $800 million in additional financing. The 20-story postwar buildings, with almost 600 units, are slated to become pricey remodeled condominiums at nearly $2,000 per square foot as tenants leases expire.

"Jerry O'Connor has the upper hand on this ruling," said a source familiar with the case. "He already has the money, while Kalikow is going to have go fish."

Kalikow was said to have had the backing of UBS, but the enthusiasm of the Swiss-based financial giant for the project was said to be waning.

According to sources, O'Connor was dissatisfied with Kalikow's duties, which included coming up with a viable marketing plan.

Kalikow could not be reached, while O'Connor had no comment when reached at his office.

The tenants, meanwhile, are not going out without a fight.

While just over 100 residents have moved out, many, mostly rent-regulated, have said they're staying put. "They're going to have to cart me out of here in a box," vowed one resident.

But one elderly resident, Martin Burwick, a 97-year-old man in failing health, died of pneumonia, allegedly because of dust and asbestos kicked up by the construction work.

Manhattan House Divided

June 17, 2007
By JOSH BARBANEL
New York Times

BREAKING up is hard to do, particularly for the developers of one of the most ambitious and expensive condominium conversions ever: the redevelopment of the Manhattan House, a complex with 582 apartments on a full square block on East 66th Street and Third Avenue.

The state attorney general approved sales at the $1.1 billion conversion this spring. But sales have been stalled while the project’s general manager, N. Richard Kalikow, a real estate investor and developer, has been feuding in court and out with his partner, Jeremiah W. O’Connor Jr., the managing partner of O’Connor Capital Partners, a private equity firm.

Last week, a State Supreme Court judge ordered that one partner buy the other out, under the terms of their agreement. But lawyers for Mr. Kalikow immediately filed a notice of appeal, and in the meantime are attempting to block the judge’s order.

Mr. O’Connor asked the court to order the buyout, while, according to associates, Mr. Kalikow was trying to put together investors to help him take over the huge project and refinance it.

The project has long faced legal challenges from angry tenants who have been living in the building during a year of messy renovations. But the court papers show that the project has also been troubled by cost overruns, along with disputes over the marketing campaign, access to the project records and even its Web site design.

The project is being marketed by Prudential Douglas Elliman, but with the sponsors in disarray, there have been no reports of contracts signed at Manhattan House. While most developers prefer to build with other people’s money, the papers show that for many months the construction has been paid for by regular “capital calls,” in which the partners provide cash to meet construction costs. The project’s lender refused to provide construction loans after the partners were unable to work out an agreement to provide a $30 million letter of credit to deal with the cost overruns, court papers say.

Yet with the huge demand for luxury apartments in Manhattan and with prices on the rise, it is not clear whether the dispute reflects financial distress or a struggle by one side or the other to capture a greater share of the rising potential profits.

In the court papers, Mr. O’Connor’s lawyer, Max R. Shulman, argued that Mr. Kalikow and his team had mismanaged the project, and with the partners unable to agree, Mr. O’Connor had the right to demand that Mr. Kalikow either buy him out or agree to be bought out. “It cannot be known how many sales and how much revenue have been and will continue to be lost as a result,” he said in court papers of the management.

But Mr. Kalikow’s lawyer, Mitchell A. Karlan, said the objections were a ruse, raised in bad faith to force Mr. Kalikow out of the deal and capture all the profits just as sales were beginning.

He said the issues raised in court were many months old and were brought up just before the final approved offering plan, known as the “black book,” was distributed to tenants in the building, triggering the beginning of sales. Once sales began, Mr. Kalikow’s share of the returns would eventually rise to as much as 40 percent from about 20 percent, he said.

The court decision would give Mr. Kalikow the first right to buy out his partner, and if he refused, Mr. O’Connor could buy him out. But because Mr. O’Connor and his investors put far more cash into the project than Mr. Kalikow did — $119 million versus $31 million, according to court papers — Mr. Kalikow would have to raise more money for the buyout.

Under the ruling last Tuesday by Justice Bernard J. Fried of State Supreme Court in Manhattan, Mr. O’Connor was required to post a $30 million bond to cover any potential damages that might eventually be owed to Mr. Kalikow under future court rulings. Once the payment is made, Mr. Kalikow will be given 30 days to decide whether to buy out Mr. O’Connor or give up his own interest in Manhattan House. At the hearing, Mr. O’Connor’s lawyers said they would post the $30 million in a few days, but that was before a notice of appeal was filed.

White Bricks and Pale Imitations

Best of a Bad Lot, Manhattan House Heard as Landmark
April 15, 2007
by JAKE MOONEY
New York Times

MANHATTAN HOUSE, the 19-story slab of an apartment building on a full Upper East Side block bounded by 65th and 66th Streets and Second and Third Avenues, was built to stand out, from its size to its stark silhouette to its most striking feature: its bold white-brick skin.

Time, changes in fashion and a host of pale imitations around the neighborhood have perhaps made the facade less surprising, but this month the building, which is actually light gray, may be on its way to getting the recognition that advocates say is long overdue. The city’s Landmarks Preservation Commission is considering protecting the building and heard testimony on the matter last week, while the local community board plans to consider it this week.

Meanwhile, Manhattan House tenants, who are involved in a long struggle with its owners over plans to convert the building to condominiums, hope that a landmark designation will preserve elements they love.

The building, completed in 1950 and designed by the firms Skidmore, Owings & Merrill and Mayer & Whittlesey, was part of a project by the New York Life Insurance Company, which bought adjacent land and kept buildings there low to ensure Manhattan House had abundant light, air and visibility. The pale brick exterior, one of the first of its kind, was meant to stand for cleanliness; the bricks were covered in a glaze to make them self-cleaning in the rain.

"It wasn’t the high-end part of the Upper East Side, and when it went up, the Third Avenue el was still there," Seri Worden, executive director of Friends of the Upper East Side Historic Districts, said last week. "So it would have been very impressive to see this 19-story white building rising among the brownstones and old tenement buildings."

John Jurayj, co-chairman of the Modern Architecture Working Group, a collective of preservationists pushing for landmark designation of Manhattan House and other modernist buildings including 40 Central Park South, a white-brick precursor, called Manhattan House a synthesis of high modernism and middle-class living, and one of the city’s first and best manifestations of the theories of Le Corbusier.

"It was a belief on some level that industrialization in general, and the byproducts of it — your kitchen stove, your refrigerator — could free you up to have a better life," Mr. Jurayj said. "It was a very hopeful idea of designing and living."

Developers of a half-century ago, though, took another lesson from the building where Benny Goodman and Grace Kelly once lived: white brick was in. The resulting homages were less than sparkling.

"It’s exciting — at first," Simeon Bankoff, executive director of the Historic Districts Council, said of the medium. "Then it becomes banal. Manhattan House is an incredibly important building, and it was really the very best of a bad lot."

The proliferation of copycats may have robbed the building of some of its distinctiveness, but Mr. Jurayj said the bricks, which eventually fell out of fashion, were not to blame. "Most of the other white-brick buildings in the city, it’s not the white brick that’s the problem," he said. "It’s not the material. It’s a paucity of skill and imagination in those architects."

What sets Manhattan House apart, he added, is the little touches, like the large picture windows, glass-fronted balconies and landscaped gardens. Details like those, along with the building’s height and outward appearance, are what tenants hope landmark designation would preserve.

The building’s current owners, N. Richard Kalikow and Jeremiah O’Connor, are in the midst of a billion-dollar conversion to condominiums, and the Manhattan House Tenants Group says hundreds of tenants have been forced out. The owners, who deny any impropriety, consider the building "an iconic property truly deserving of landmark status," said their spokeswoman, Barbara Wagner.Preservationists, meanwhile, hope the attention will benefit other modernist buildings, which have generally been harder to protect.

Modern designs, Ms. Worden said, "don’t always have the same heart-tugging appeal of older buildings, but they are an important part of New York’s cityscape."

Mr. Jurayj noted that even Manhattan House, which is relatively well known and well liked, was eligible for landmark status for more than 25 years before last week’s hearing. "You run the risk," he said, "of losing important things."