JSR CAPITAL L.L.C. AND AFRICA-ISRAEL, Was the umbilical chord ever cut?

taken from the websites of Africa Israel and JSR Capital L.L.C.

LostMessiah April 11, 2016

Jona Rechnitz and Africa Israel -23 Wall Street, Apthorp, Cushman & Wakefield, Sonangol – another entanglement….

Jona Rechnitz has been referred to in various articles as an ‘alumnus’ of Africa-Israel. His LinkedIn profile only lists Africa Israel. One could argue that he does not update that profile. In fact, the connection between Africa Israel and Jona Rechnitz  has been largely referred in the news, passively as an item for the curriculum vitae of Jona Rechnitz. We feel that is a journalistic oversight.

In our view, the connection between the two entities cannot be understated. We also think that the involvement by Cushman & Wakefield as brokering various deals involving both Africa Israel and Jona Rechnitz/JSR Capital and Sonangol as purchaser of 23 Wall Street in 2008 are not to be dismissed either.

The websites of both Africa Israel and JSR Capital L.L.C. have pictures of some of the same entities, not the least of which are the Apthorp Building and the 23 Wall Street building, both of which have been riddled with battles, the latter being referred to as the greatest mystery in real estate. 

In 2010, Governor Andrew Cuomo reviewed the Apthorp deal and there were issues even then, as reported by the Wall Street Journal. The deal, as designed, should have allowed the Lenders to seize the property in the event of a default by the borrower. Yet, in 2011, things had already started to go south.

The Apthorp, in theory, should have been out from under both JSR Capital L.L.C. and Africa Israel  by 2011, according to articles reported in the news at the time and posted here. However, the website of JSR Capital L.L.C. and Africa Israel, as of the writing of this article, boast both properties which are listed as current holdings.

It is arguable that JSR’s website, which presumably has not been updated since 2013, is simply outdated. We feel that doesn’t hold water because if news reports are correct, the Apthorp should have been off  both websites by 2011/2012. With regard to 23 Wall , Africa Israel sold the property to Sonangol in 2008. It therefore should never have been added to the website of JSR because Rechnitz was presumably still with Africa Israel at the time and arguably brokered the deal while in Africa Israel’s employ. If one does not accept that argument, there was no chronological event that we have found, which in our view would justify the 23 Wall Street being listed as a current holding by JSR, not now and not in 2013. 

Both the Apthorp and the 23 Wall Street property remains on both websites; and we feel that this is no coincidence.

We believe that the two, Africa Israel and Jona Rechnitz remain intertwined; and contrary to the New York Post article of 2016, the shared images on the websites of both Africa Israel and JSR Capital L.L.C. are no accident.

August 19, 2010

The Wall Street Journal reported

“The New York attorney general’s office is taking a look at undisclosed deals between the developers and lenders to the Apthorp, the storied but financially troubled Upper West Side apartment building famous for its grand architecture and celebrity residents.

Andrew Cuomo’s office three months ago accepted the Apthorp’s plan to convert rentals to condominiums, giving new momentum to the troubled project.

But now the office is gathering information about an agreement reached between the ownership group, led by Africa Israel USA, and the primary lender Anglo Irish Bank to determine if the parties need to disclose it to potential buyers, according to a spokesman for the attorney general.

Under the arrangement, Anglo Irish agreed that the developers will be able to use sales proceeds of up to $130 million toward the renovation and operation of the 102-year-old landmark building. The parties also agreed to extend the loan for three years. The developers owe Anglo Irish $323 million for the mortgage loan, according to Richard Marin, chairman and chief executive officer of Africa Israel USA.

“This is almost unprecedented in restructuring. It shows confidence in this project,” said Mr. Marin.

The new agreement completed last month contains provisions to protect the lender if the project runs into financial problems again. If the building has not met certain sales targets within three years, the developers will be in default and the lenders will be able to use an accelerated foreclosure process to take control of the unsold apartments.

“We agreed to make sure they can seize the property quickly,” Mr. Marin said.”

On September 9, 2011

The Wall Street Journal reported:

Apthorp’s Owners Balk at Sale of Mortgage

“Just when it looked like the long-running saga surrounding the Apthorp was winding down, a new battle is heating up for control of the 103-year old landmark property.

Last month it appeared that Anglo Irish Bank Corp. was done with the often-troubled condo-conversion project when it sold the $260 million mortgage on the West Side building, famous for its grand architecture and celebrity residents. The buyer was Dallas-based private-equity shop Lone Star Funds.

But now the Apthorp’s owners, which nearly defaulted on the loan in June, are saying not so fast. Developer Africa Israel USA and the building’s other owners are threatening to exercise a right they say they have in their loan agreement to reject the sale to Lone Star.

The ownership group is preparing to mount a challenge to that sale in court, though the owners could still hold off filing it if they reach an agreement with Lone Star, says a spokeswoman for the group.

Another possibility: Lone Star might sell the loan to AREA Property Partners, say people close to the matter. The New York real-estate investment firm holds a $50 million mezzanine loan on the property and has previously indicated an interest in the senior debt. Area bid unsuccessfully for the senior loan during the Anglo Irish loan auction.

Representatives of AREA and Africa Israel and a Lone Star executive declined to comment. Anglo Irish didn’t respond to requests for comment.

Real-estate attorneys say provisions that allow borrowers to block loan sales are rare. They were surprised that Anglo Irish, which agreed to restructure the Apthorp debt last year, would allow the owners to keep an option that could undercut the value of the loan. These provisions typically allow borrowers to extract concessions from new lenders, attorneys said.

The maneuvering over control of the Apthrop [sic] is the most recent act in one of New York’s most closely watched real-estate dramas.

Built by the Astor family in 1908 for the Upper West Side’s elite, the Apthorp is known for its sprawling internal courtyard. It has been home to numerous boldface names, including Al Pacino, Conan O’Brien and Rosie O’Donnell.

Africa Israel and developer Maurice Mann bought the building for $426 million in 2007, paying one of the highest prices ever for a rental building. The new owners are converting the 163 units to condos. So far, less than 50 units have been sold.

The partners in the venture have feuded in court, and AREA threatened at one point to foreclose on the property. In 2009, Mr. Mann stepped down as a managing partner and was replaced by the Feil Organization. Mr. Mann and his partners retain an ownership stake.

Also in 2009, the owners were under pressure to sell at least 15% of the units, or 25 condos, by a September deadline for the New York Attorney General to approve the conversion plan.

“With a couple of weeks to go, the owners were short of the sales needed. Jona Rechnitz, an executive at Africa Israel at the time, made introductions to buyers that lead to about a dozen sales and helped the building meet the attorney general’s sales threshold, say people familiar with matter.

In June, the Apthorp owners missed a payment to Anglo Irish and could have been in technical default, say these people. But Anglo Irish officials, preparing to sell the building’s loan at auction as part of a pool of debt for New York property, didn’t want to cheapen the loan’s value by declaring it in default.

Instead, the lenders gave the owners a 30-day extension. Mr. Rechnitz—who had left Africa Israel to form his own investment firm, JSR Capital—led a group of local investors that bought about a dozen Apthorp units at a discount. That enabled the developer to make its payment and avoid default, people familiar with the matter say.

Mr. Rechnitz also made Africa Israel an offer to buy the developer’s 50% ownership stake in the Apthorp, say people familiar with the matter, though it’s not clear how serious the negotiations are.

“The Apthorp has gone from a rundown building to a premier building with the highest standards of quality and service,” Mr. Rechnitz said in an email.

Meanwhile, the Apthorp owners have been trying to upgrade the building’s amenities. They are adding a fitness center, steam room and sauna, heat and air-conditioning in the hallways and new elevators and windows, according to an August memo sent to condo owners.””

Crimefile reported in 2011:

Africa Israel Real Estate Transfers Produce Mixed Results – September 11, 2011

“Lev Leviev’s Africa Israel concluded the month of August agreeing to transfer a 49 percent stake in 88 Leonard Street, a 352-unit luxury apartment complex to Chicago based real estate investment firm Waterton Associates for $37 million. Steven Vegh of Multi Investment continued to negotiate with Africa Israel to transfer the remaining 51% ‘which consists of the senior mortgage and mezzanine loans,’ of the property during the first quarter of 2012. The transfer of the remaining assets priced tentatively at ‘$17 million, $132 million and $24 million,’ was undertaken in stages for accounting purposes. Waterton Associates ‘run by University of Chicago graduate Stephen Schwartz,’ sought to fund the transfer through the $500 million Waterton Residential Investment Fund 11 after convincing Africa Israel to lower its initial asking price of $200 million for the property. It is interesting to note Leviev and Africa Israel were represented during the negotiations by Cushman & Wakefield, a firm formerly owned by Rockefeller Group International Inc. RGI Inc., sold a 67.5% stake in Cushman & Wakefield to IFIL Group, the investment group of the Agnelli family in 2006.

This news was followed up with expectations for the closing of a deal between Africa Israel and fashion designer Tommy Hilfiger. This deal would have transferred ownership of the Manhattan Clock Tower office building to Hilfiger who planned to convert the property into a luxury hotel. The agreement reportedly unravelled when Hilfiger and Jona Rechnitz of JSR Capital failed to deliver $170 million as agreed upon during negotiations. Africa Israel promptly returned a $5 million deposit Hilfiger and Rechnitz put down after failing to secure the needed financing that would have allowed them to convert the property as planned. As a result of the announcement shares in Africa Israel dropped 2.5% during day trading. Rechnitz is he former director of Africa-Israel acquisitions.

A third transaction involving control of the Apthorp building opened eyes after Africa Israel challenged the Angelo Irish Bank Corporations sale of the buildings $260 million mortgage to Lone Star Funds, a Dallas-based private equity shop. Lone Star acquired the mortgage in a $9.5 billion deal involving the purchase of the Anglo Irish Bank’s portfolio of commercial properties and mortgage loans. Lone Star partnered with JPMorgan Chase & Co., and Wells Fargo & Co., in obtaining the portfolio. Lone Star acquired the entire nonperforming portion of the portfolio whereas JP Morgan and Wells Fargo retained the remaining assets. A closer look at Lone Star reveals the Dallas-based firm is headed by one of Ireland’s wealthiest individuals John Grayken. Grayken has used Lone Star to acquire the home lending unit former held by CIT ‘$1.5 billion offset by $4.4 billion in debt,’ Accredited Home Lenders Holding Co., ‘$295 million,’ and Bear Stearns ‘ mortgage division. Grayken and partner Ellis Short came under fire after the latter was indicted by South Korean authorities after Lone Star took over the Korea Exchange Bank. Short promptly retired from Loan Star but continued to maintain a high profile in investment and sporting circles.

Short was absolved latter and led the takeover of troubled German bank IKB Deutsche Industriebank AG. Therefore it is interesting to note the news that the Anglo Irish Bank offered to allow the Quinn family to walk away from 2.8 billion worth of debt in exchange for control of the families crumbling business empire. What the bank sought was control of the families portfolio of international properties, a portfolio that would be included in the aforementioned asset transfer to JP Morgan Chase & Co., and Wells Fargo.”

A few points from Africa-Israel website:

Africa-Israel

“AFI USA: Established in 2002, the company focuses on exclusive residential projects and income-producing properties. The company is active in New York where it owns the New York Times Building, the “Clock Tower” and the APTHORP exclusive residential building. It is also active in Miami and other cities.

Assets in Israel: The company owns hundreds of thousands of square meters of income-producing properties, commercial centers, science and industrial parks and office buildings.”

JSR Capital L.L.C.

“ABOUT
Founded in 2010, JSR Capital is a private real estate development and management company that focuses primarily in the New York area as well as other major markets throughout the United States. The company, has been involved in a variety of retail and residential properties. For more information please contact (212) 308 2432.”

[Note: last updated 2013]

Sonangol

“VISION

Ensuring and strengthening the constant presence of Sonangol in the international market with a competitive price to the marketing of crude oil and products to customers on behalf of Sonangol EP.

MISSION

Dedicated to the marketing of crude oil and products with a commitment to provide high quality services that meet the highest standards of performance, meeting customer expectations, offering exceptional value through teamwork by striving for continual improvement and with continued investment in personnel and other resources, ensuring a client driven and cost effective solution at all times.”

[Note, there is no mention of real estate holdings on the Sonangol website, nor have we found much mention of real estate holdings elsewhere. The only known holding is 23 Wall Street. Sam Pa was referred to by the Real Deal as a Chinese billionaire who let an asset “go to ruin.” He is also referred to in that same article as heading an “investment firm.” We have found nothing to indicate that Sonangol was ever an investment firm; but rather it would seem that 23 Wall was an anomaly. We think, however, that Sam Pa’s involvement has been carefully orchestrated, as well as the involvement of Rechnitz and Africa Israel.]

In 2015 the Real Deal reported:

“A shadowy Chinese energy tycoon, recently arrested in a Communist Party corruption probe, is responsible for keeping 23 Wall Street in the Financial District out of commission since 2008.

Sam Pa, who heads investment firm Sonangol, has failed to find a tenant for the 101-year-old landmark building, which sits across the street from the New York Stock Exchange, despite its prime location and a booming investment market.

“Their heart’s never really been in finding a tenant,” an unnamed real estate insider told the New York Post.

Still, a plan to lease the 130,000-square-foot building to multimedia production firm Latitude 360 only recently fell through, the Post reported.

Pa’s whereabouts since his arrest two months ago are unknown. The mogul controls an interlocked network of more than 60 companies, known as 88 Queensway, is known for his globe-trotting, partying lifestyle and seven different aliases.”