Nov. 17 (Bloomberg) -- Anglo Irish Bank Corp., the Dublin-based lender seized by the government after its real estate loans soured, will auction 232 unsold condo units in Manhattan’s Battery Park City today in an attempt to recoup $135 million it is owed on the project.
The apartments at 225 Rector Place will be sold in bulk along with a garage and commercial space to maximize the return, said Chris Sullivan, a partner at New York-based law firm Herrick, Feinstein LLP who is representing Anglo Irish in the sale.
“You get a much higher price but you also get a sophisticated developer,” Sullivan said by telephone. “The hope is you get a big developer who knows exactly what to do, who commits to finishing” the empty units and common areas.
The auction will take place at 1 p.m. at New York Supreme Court at 60 Centre St. in lower Manhattan, Sullivan said. The bulk sale price will likely be a “heavy discount’ to what the bank is owed, Sullivan said.
Anglo Irish, once Ireland’s biggest publicly traded lender to property developers, increased its U.S. loans sevenfold in the four years through 2008 to 9.3 billion euros ($13 billion). That was about 13 percent of its total loans at the time, according to financial reports.
In 2005, Anglo Irish loaned to properties in at least 14 U.S. cities, including Miami, Chicago, Detroit, Los Angeles and Washington, according to New York-based property research firm Real Capital Analytics Inc. It backed at least $2.4 billion of Manhattan real estate deals from 2005 to 2009. They include the renovation of the Apthorp, a 12-story property built in 1906 with 163 apartments and a 117-car parking garage; the purchase of a Ralph Lauren store on Madison Avenue and 72nd Street on the Upper East Side; and a Holiday Inn on Lafayette Street in SoHo.
“There’s an internal debate within Ireland on whether to sell everything now or manage it over the next couple of years to maximize value,” said Ben Thypin, an analyst at Real Capital.
“The continued assumption of liabilities from failed banks in Ireland is making creditors, namely the European Central Bank, nervous,” Thypin said.
Ireland nationalized Anglo Irish in 2009 and is preparing to take a majority stake in Allied Irish Banks Plc, the country’s second-largest bank. Allied Irish and Ireland’s biggest lender, Bank of Ireland Plc, are growing increasingly reliant on the ECB for funding. ECB loans to banks based in Ireland rose 7.3 percent to 130 billion euros in October from the previous month, Ireland’s central bank said on Nov. 1.
Steps taken to salvage Ireland’s banking system will widen the deficit to 32 percent of gross domestic product in 2010.
Anglo Irish’s U.S. loans are concentrated in cities including New York, Boston and Washington, which makes their assets attractive to buyers, Thypin said.
Anglo Irish initiated foreclosure proceedings at 225 Rector Place in February 2009, saying in court papers that developer Yair Levy didn’t pay property taxes or contractors and failed to “complete the work needed to make the project safe and habitable.”
Levy, who turned the rental property into condominiums, has sold 72 of the 304 units in the building, according to the suit. No units have sold since foreclosure proceedings began, leaving more than 75 percent of the apartments empty, Sullivan said.
Rex Whitehorn, an attorney representing Levy and his company YL Rector Street LLC, didn’t return a phone call yesterday evening and wasn’t immediately available today.
The case is Anglo Irish Bank Corp. Limited v. YL Rector Street LLC, et al, No. 101796/2009, New York Supreme Court, Manhattan.
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