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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsAwww!! High-End Manhattan RE Developer HFZ Implodes In Maelstrom Of Arrests, Debt & Fraud
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In truth, its hard to compare any other builders misfortunes with the enormous pile of rubble through which Feldman is presently wading. In addition to losing its portfolio, HFZ has been sued by a slew of contractors, lenders, and investors. Lawsuits are to be expected during bankruptcy proceedings, but the allegations of impropriety within some of the suits including accusations that Feldman and his partner skimmed millions to fund their extravagant lifestyles are not. To make matters worse, last year, one of HFZs key investors, an Israeli diamond magnate, was convicted of bribery and sentenced to five years in a Swiss prison. And the companys former managing director of development someone Feldman employed for more than 20 years was arrested and sentenced to prison for awarding contracts to the Mafia. Last year, the New York State attorney general confirmed her office was reviewing a fraud complaint against HFZ, though to date, nothing seems to have come of that investigation.
Manhattan has always been a playground for the rich, and the decade-long all-they-can-eat asset buffet that followed the Great Recession nurtured a fresh crop of luxury developers including HFZ, who soaked the city with units that advertised floor-to-ceiling windows and hotel-quality amenities. The boom was fueled in part by overseas buyers from Russia, China, Latin America, and the Middle East who stashed their money in those units, investments that offered stability and, thanks to the citys tolerance of LLC property owners, anonymity. That influx of extreme wealth transformed New York. In little more than a decade, the citys median sale price nearly doubled, driven by luxury condos in neighborhoods essentially invented by property developers and their marketing teams: West Chelsea along the High Line and Billionaires Row, a neighborhood with a boundary primarily defined by its being above everyone else. Luxury developers raced to keep up with demand, and HFZ was among the splashiest of the bunch. By the mid-2010s, the firm was responsible for a significant percentage of the luxury condos coming to market. By 2015, HFZs two top executives, Feldman and managing director Nir Meir, were appearing on lists of the most powerful developers in the city.
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In the spring of 2018, HFZ opened the XI Visionaries Gallery, a 12,000-square-foot salesroom located in a storefront a few blocks from the XI. The space was unlike any sales gallery anyone in the industry had ever seen before. At its center were multi-sensory installations by Es Devlin, a British artist known for designing elaborate stage sets for Kanye West, Lady Gaga, and the Weeknd. At the gallerys opening, men in black suits poured complimentary glasses of Macallan 25, which retails at $1,999 a bottle. One former employee estimated the total cost of the sales gallery to be at least $25 million. Units went on sale in the fall of 2018. Jeff Bezos reportedly showed interest in a penthouse before opting for a Madison Avenue spread. Graeme Hart, the richest person in New Zealand, snatched up one of the XIs penthouses for $34 million. Then the luxury-condo market started to strain under the weight of excess inventory. A 2019 analysis by StreetEasy estimated that a quarter of all new luxury apartments built after 2013 had not found buyers, an inauspicious indicator for a developer that had recently brought 236 glistening units to market. (Filings would later show that just 38 of those units, or 16 percent, were sold by the time HFZ went bust.) Feldman remained optimistic that his brand of luxury was strong enough to buck market trends. Its about the buildings you cant broad-stroke an entire market, he told the New York Times.
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According to Feldman, a series of incidents in the fall of 2020 tipped him off to how bad things had gotten at his company. One day at the office, Feldman said he checked in on a group of accountants carrying out an audit for an HFZ investor. When Feldman asked if they had everything they needed, the accountants told him Meir had instructed them not to bother Feldman because hed recently had open-heart surgery. (He had not.) Then Feldman said he was alerted to documents bearing his signature, which he alleges Meir forged. Feldman also found out about a term sheet that he claims Meir doctored to look as if HFZ had received a $900 million loan from JPMorgan Chase in 2020. (HFZ had received the loan in 2019.) The final straw came when Feldman spoke to an investor who said Meir had fabricated a Korean investor, even enlisting someone with a Korean accent to dial into a phone meeting, according to Feldmans complaint. Feldman fired Meir in December 2020. It was the last time the two spoke.
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https://www.curbed.com/2022/05/hfz-capital-group-xi-building-nyc-real-estate.html?utm_source=pocket-newtab
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