Renderings of the Baccarat at 20 West 53rd Street and Barry Sternlicht

Barry Sternlicht’s Starwood Hotels & Resorts Worldwide is in late-stage talks to sell the forthcoming Baccarat hotel for $200 million, or a record $2 million per room.

If the deal were to close, it would tie the sale of the Plaza Hotel in 2012 as the priciest ever for a U.S. hotel on a per-room basis, according to STR Analytics data cited by the Wall Street Journal. Starwood would hold onto the Baccarat brand and maintain the management contracts under the deal.

After almost 10 years in private equity, Sternlicht returned to the hotel operations business to run the 114-room hotel at 20 West 53rd Street. Starwood and Tribeca Associates jointly developed the Baccarat, which is expected to open in February. A penthouse there is asking $60 million.

Starwood plans to continue acquiring hotels for its private-equity funds and then sell them about three years later, the newspaper said. [WSJ] — Mark Maurer

MetLife Building at 200 Park Avenue in Midtown (Inset: Jerry Speyer)

MetLife is negotiating a lease for a 90,000-square-foot space at Tishman Speyer’s 200 Park Avenue, the 3 million-square-foot office tower that bears its name at the top.

The life insurance giant is weighing whether to consolidate its New York operations into the single-floor space at the 58-story property, near East 44th Street. MetLife subleases out all of its space in Long Island City and has moved most of its employees into the former Verizon building at 1095 Sixth Avenue, also known as 3 Bryant Park.

At the latter building, the tenant leases the top portion, where asking rents exceed $80 per square foot, according to the New York Post.

Fred Pieretti, a MetLife spokesperson, denied a move to 200 Park to the newspaper.

“MetLife has not decided to move any employees to 200 Park and has no space available for sublease at 1095 Ave. of the Americas,” Pieretti said.

During the third quarter, law firm Paul, Hastings, Janofsky & Walker took more than 180,000 square feet at the building and is planning to relocate in 2016, as previously reported. [NYP] — Mark Maurer

Renderings of 33 East 74th Street and retail at 935 Madison Avenue (credit: Neoscape)

1. Inside the remaking of Madison Avenue amid Met arrival [NYT]
2. LA Fitness CEO is potential buyer of $41 million Walker Tower penthouse: report [NYO]
3. InterContinental New York Barclay to expand the presidential suite [NYP]
4. Formerly unemployed woman ordered to stop renting out home on Airbnb after income spikes [NYDN]
5. Critics of New York state tax breaks say some tech firms never intended to leave [WSJ]
6. Developer SANBA building Red Hook townhouses [NY YIMBY]

– Mark Maurer

325 Lexington Avenue

From the December issue: The Real Deal compiled this month’s development and leasing updates. [more] 

Eric Schneiderman

New York Attorney General Eric Schneiderman and attorneys general from 16 other states plan to request today that the U.S. Supreme Court uphold longstanding interpretations of the U.S. Fair Housing Act related to racial discrimination.

Schneiderman and the others will appear in an amicus brief before the court to discuss the “disparate impact” claims to housing policies that usually directly impact racial minorities.

“The United States Congress passed the Fair Housing Act specifically to bring an end to residential segregation in America. Despite the progress we have made over the past several decades, we continue to see significant racial segregation in housing today. For that reason, we need every tool in our arsenal to achieve the goals of integration and equal opportunity for all,” Schneiderman said in a statement obtained by Capital New York.

“The protections of the Fair Housing Act are no less important today than they were when the law was passed 46 years ago. They help us ensure access to housing for protected groups. We urge the court to reject this challenge to an important civil rights law.” [Capital NY] – Mark Maurer

From left: Hunt Slonem (blacktiemagazine.com), Carri Lyon and 14 53rd Street in Brooklyn

Noted artist and art collector Hunt Slonem is relocating his studio and offices to Sunset Park from Hudson Yards.

Slonem inked a 15-year lease for nearly 31,000 square feet on part of the second floor and the full sixth floor at SL Realty’s 14 53rd Street. His company previously occupied the 22,500-square-foot third-floor space at 509 West 34th Street, a property that is now being redeveloped.

Peter Thorsen represented the landlord in-house, while Cushman & Wakefield’s Carri Lyon represented the tenant, the New York Post reported. Asking rents are as high as the low-$20s per square foot.

Slonem’s studio has also previously operated out of 545 West 45th Street, 303 West 10th Street and the Starrett-Lehigh Building. [NYP, 2nd] — Mark Maurer

1369 Broadway in Midtown

Moshe Piller is in contract to buy a six-story Midtown commercial building for north of $40 million from Sitt Asset Management and Sutton Equity. The firm plans to extend the property by as many as eight floors, The Real Deal has learned.

The building at 1369 Broadway, near West 37th Street, would rise a total of 13 or 14 stories, depending on city approvals, Moshe Piller said. After the expansion, the property will be entirely retail and span roughly 40,000 square feet. The floors currently average 2,600 per square feet.

The Moshe Group’s Moshe Majeski represented both the buyer and the seller. Majeski declined to comment.

The building has “a great, undervalued retail component,” Saul Piller told the New York Observer, which reported on the buyer first.

Moshe Piller said the deal is expected to close in February, and he has not yet selected an architect. [NYO] — Mark Maurer

1. Greystone nets big profit with sale of West Village townhouse
2. Manhattan’s 10 most expensive retail leases of 2014
3. What top Miami developers are predicting for 2015

Like The Real Deal on Facebook for breaking industry stories, links to quirkier pieces and lively conversation about important properties in New York and around the world. [TRD's Facebook Page]

Lincoln Lane North rendering (credit: Terranova)

From the South Florida website: Institutional real estate investors paid record breaking prices to acquire South Florida’s most sought after trophy buildings in the past year. In some cases, sellers made more than a 50 percent profit as buyers continued to pay premium rates per square foot of commercial property. Here are the top 10 building sales for 2014:

1. Six-building Lincoln Road Portfolio | $342M

In one of the largest deals in South Florida history, Terranova Corp. and Acadia Realty Trust announced in August the sale of its six building portfolio on Lincoln Road to Morgan Stanley Real Estate Investing and affiliates of Terranova for $342 million. Terranova and Acadia made a 79 percent profit on the properties, which took three-and-a-half years to assemble at a cost of $191 million. The buildings involved in the deal include 600, 719-737, 740, 801-821, 826-838 Lincoln Road, and 723 North Lincoln Lane. Among the high-profile tenants are A/X Armani Jeans, Dylan’s Candy Store, Khong River House, Starbucks, Sushi Samba and 50 Eggs.

2. Las Olas Centre | $204M

In March, RAR2, an entity managed by RREEF America, the real estate investment business of Deutsche Bank’s Asset Management division, acquired the nearly 470,000-square-foot office complex at 350 and 450 East Las Olas Boulevard in Fort Lauderdale for $204 million. The seller, USAA Real Estate, paid $170 million in 2010 for Las Olas Centre, which counts Bank of America, JPMorgan Chase, Morgan Stanley and Wells Fargo Bank among its star tenants.

3. Shore Club | $175.3M

Ownership of the iconic boutique hotel at 1901 Collins Avenue in Miami Beach changed hands in the first week of January. New York-based Philips South Beach filed a special warranty deed transferring ownership of the 1901 Collins Avenue property to another New York company, Shore Club Property Owner, which is managed by New York-based HFZ Capital Group, according to state corporate records. The new owner assumed two mortgage notes totaling $175.3 million for the 309-room hotel constructed in 1938. HFZ also launched sales of 75 units as condos starting at $2 million during Art Basel this year, securing 13 reservations.

4. CityPlace Tower | $150M

Newport Beach, Calif.-based KBS Real Estate Investment Trust sold the trophy office tower at 525 Okeechobee Boulevard in West Palm Beach for $150 million in August. The buyer, CPT Equity LLC from Greenwich, Connecticut, paid a 19 percent premium over the $126.5 million that KBS paid for CityPlace Tower in 2011.

5. Courvoisier Centre | $146M

In April, Orlando-based Parkway Properties paid $146 million, or $422 per square foot, for the two Class A buildings at 501 Brickell Key Drive in Miami. The seller, New York-based Tishman Speyer, completed a $10 million renovation of the 346,000-square-foot, 84-percent leased complex last year.

6. Douglas Entrance | $100M

Banyan Street Capital of Miami, in a joint venture with Oaktree Capital Management of Los Angeles, acquired the five-building project from Pearlmark Real Estate Partners of Chicago in March for $100,750,000, or $216 per square foot. The property is a Class A, 467,325-square-foot landmark office campus in Coral Gables that was 82 percent leased at the time of the transaction.

7. ArtCenter South Florida | $88M

In another blockbuster deal for a Lincoln Road property, the nonprofit ArtCenter South Florida sold its headquarters building for $88 million in October. The 17,642-square-foot facility at 80 Lincoln Road was purchased by a joint venture between TriStar Capital and RFR Holdings, which has yet to announce their exact plans for redeveloping the site.

8. Dream South Beach | $70M

SB Hospitality, a firm managed by Russell W. Rosen, an attorney with Warshaw Burstein LLP in New York., purchased the 108-room Art Deco hotel from TBS Realty, a New York-based company managed by Rabinder Pal Singh, at a 226 percent premium over its last trade in 2006, when it was bought for $21.5 million. Located at 1111 and 1119 Collins Avenue in Miami Beach, Dream South Beach is subdivided into condominiums.

9. The Raleigh Hotel | $56.6M

In April, Elmira Miami, a company controlled by fashion mogul Tommy Hilfiger, paid $56.6 million for the 105-room hotel at 1775 Collins Avenue. The iconic building was previously owned by David Edelstein and Sam Nazarian’s Twice Around 1775 LLC, which paid $55 million for the property in late 2012. The deal included assigning a $35 million mortgage from the seller to the buyer.

10. 550 Biltmore Way | $50.2M

KPERS Realty Holding #39, managed by AEW Capital Management, paid a 40 percent premium in December to acquire the trophy office building in Coral Gables. PR 550 Biltmore Way, an affiliate of Prudential Real Estate Investors, sold the property anchored by UBS to KPERS for $50.2 million.

From left: Harry Macklowe and Rolando Acosta

An appellate panel has affirmed a Supreme Court justice’s granting of a summary judgment against Harry Macklowe after a long-running legal battle between the developer and former partner Warren Cole.

The Appellate Division in the First Department also affirmed a $30 million judgment entered by Supreme Court Justice Cynthia Kern against Macklowe himself. Cole worked for Macklowe from 1988 to 1999.

The panel found that Cole retained his 9 percent interest in the partnership because Macklowe did not close on his purchase of the stake, according to the New York Law Journal. Cole claimed that his obligation to sell the stake in 1999 was conditioned upon Macklowe’s setting the purchase price, which Macklowe never did.

“While the [partnership agreement] does not clearly spell out all the mechanics of executing the buy-sell provision, it is implicit that the initial step was Macklowe’s valuation of the partnership interest,” Justice Rolando Acosta wrote in an opinion Tuesday.

The panel rejected Macklowe’s claim that his former partner’s allegations were barred by doctrines of waiver and estoppel in earlier court rulings, according to the paper.

“Cole’s inaction does not raise any issues of fact with respect to defendants’ affirmative defenses because the [limited partnership agreement] imposed no affirmative duty on Cole, even after his employment terminated, to take action to maintain his partnership interest,” according to Acosta. [New York Law Journal] — Mark Maurer

Construction site (Photo: Pedro Moura Pinheiro on Flickr)

Construction costs in the U.S. hit a record level after declining slightly in 2008, according to a report by property and construction firm Rider Levett Bucknall.

The firm’s quarterly index of construction costs, which are rising at the fastest pace in six years, increased 1.66 percent between July and Oct. 1. According to the report, this is the largest three month increase in building costs since the beginning of 2008.

The numbers reflect the housing market’s improvement, where demand for labor and construction material has driven up construction costs. The report also predicts construction starts will rise about 10 percent next year, or nearly double the estimated growth rate of 2014.

“General optimism with the construction sector has continued to rise,” the report said. [WSJ] –Kerry Barger

Rendering of South Street Seaport tower (Credit: SHoP Architects)

SHoP Architects seems to be everywhere these days, but nowhere is the firm’s presence felt more keenly than around South Street Seaport. In addition to a number of infrastructural enhancements that the firm has ably designed, SHoP is responsible for a new tower that is being developed by the Howard Hughes Corporation. The building is at the heart of the developer’s recently released South Street master plan that is now before the Landmarks Preservation Committee as well as the community board.

This tower was the most heatedly debated part of the original – and controversial – plan that the Hughes Corporation made public a year ago. The new plan addresses some of the greatest concerns of the locals. In consequence the tower, intended to rise beside Pier 17, will be 494 feet high instead of the previous 650. That works out to 42 stories. In the earlier plan, the building was slated to house 52 stories.

Beyond the height of the building, it was hard to form a definitive idea about the older version of the tower because the renderings were somewhat vague.

But this may indeed be one of the occasions when more really is more. The previous design for the building gained a certain presence because of its height. The newer structure seems somewhat squatter and its wobbly, trapezoidal massing lacks something of the elegance of the earlier version.

In addition, the pale newer tower, with its drab cladding and syncopated darker accents, looks more “normal” and decidedly more boring. It lacks the subtle and interesting instability of the earlier design. Indeed, compared to the first rendering of the building, the latest iteration of the tower is run of the mill.

From left: Joe Moinian and 3 Hudson Bouelvard Photo by STUDIO SCRIVO

The Moinian Group estimates it will cost $1.6 billion to develop its 1.7-million square-foot Hudson Yards office tower, 3 Hudson Boulevard, according to a public notice of the company’s intent to apply for economic incentives.

The developer put the $1.6 billion price tag on the planned 66-story tower at 400 11th Avenue on the corner of 34th Street when it filed an application with the New York City Industrial Development Agency seeking to make certain payments in exchange for forgoing property and mortgage-recording taxes on the tower.

The IDA had scheduled a hearing on the application for Jan. 8, but a spokesperson said Moinian had not submitted a complete application and the hearing will be rescheduled.

Moinian, like other office-tower developers in the booming Far West Side neighborhood, is in the process of purchasing bonus building rights for its property.

The total development costs – which include both soft- and hard-costs – work out to about $916 per square foot, which is roughly three-quarters the price Tishman Speyer, Moinian’s neighbor on the western side of the block, is paying.

In a similar filing with the IDA over the summer, Tishman said it will cost $3.2 billion to develop its 2.6-million-square-foot office tower at the corner of 10th Avenue and 34th Street.

That works out to nearly $1,230 per square foot. The prices each company paid for their respective development sites could explain the differences in cost.

Moinian paid about $117 per buildable square foot when it bought its site for nearly $55 million back in 2005. Tishman, on the other hand, paid about $649 per buildable square foot earlier this year to assemble two different properties for $438 million.

From left: Roger Sterling (John Slattery) as Santa on “Mad Men,” 11 Penn Plaza and Mary Ann Tighe

AMC Networks, which airs TV series such as “Mad Men” and “The Walking Dead,” is expanding by 40,000 square feet at Vornado Realty Trust’s 11 Penn Plaza.

The cable network will now occupy a total of 330,000 square feet at the 23-story, 1.1 million-square-foot Midtown office property, Crain’s reported. Asking rent is in the $60s per square foot.

CBRE Group’s Mary Ann Tighe and Gregory Tosko represented the tenant, while Glen Weiss represented Vornado in-house. AMC has occupied the building for more than 10 years.

Last year, 11 Penn Plaza underwent a $450 million refinancing, as previously reported. [Crain's] — Mark Maurer

Plaza at 1 Central Park South

1. Plaza condo gets $15 million price chop to $35 million [Curbed]
2. Former General Motors plant in Westchester County sold for $50 million [NYP, 3rd]
3. Harbor Picture Company‘s new Soho space to house state’s biggest audio stage [Capital NY]
4. REIT investors reel in gains of 65 percent, survey shows [Bloomberg News]
5. 5 Bryant Park fully leased after SoulCycle deal [NYO]
6. Nicholas A. Brizzi park in Borough Park reopens after renovation [Brooklyn Eagle]

– Mark Maurer

In honor of the Christmas holiday, we won’t be posting on Thursday (but we’ll keep our eyes peeled for breaking news). The Real Deal wishes you and your family a safe and happy holiday. Be sure to check back here on Friday, starting at 7:30 a.m., for the latest in real estate news.

One of the New York City locations on “Home Alone 2″

1. Spying on listings [NYT]
2. New apartment building to replace Williamsburg diner [Brownstoner]
3. A new look at a 19-story NoMad hotel [NY YIMBY]
4. Mapping all of NYC’s locations on “Home Alone 2″ [Curbed]
5. Comedian Dennis Miller is selling California mansion for $22.5 million [Business Insider]
6. What you need to know before renting in NYC [Brick Underground]

– Claire Moses

From left: Sergey Brin, Larry Page and the former marine terminal building at Pier 57 (Credit: Young Woo & Associates)

Google is in preliminary talks to lease a portion of the former Marine and Aviation Building at Pier 57 — across the street from the former Nabisco factory in Chelsea it recently agreed to occupy.

The Mountain View, Calif.-based tech giant, which opened its first office in New York in 2000, now has about 4,000 employees in the city, the Wall Street Journal reported. Google controls more than 3.5 million square feet of office space in New York City.

Scott Rechler’s RXR Realty and Youngwoo & Associates teamed up in September to convert 200,000 to 300,000 square feet of space on the pier into offices. Youngwoo initially proposed redeveloping the site as a shopping center called SuperPier. Pier 57 was built as a marine terminal in 1952.

In Novemer, Google officially signed for 180,000 square feet at 85 10th Avenue, owned by Vornado Realty Trust and the Related Companies. The tenant plans to take a total of 360,000 square feet there after the federal government vacates next year. [WSJ] — Mark Maurer

California real estate

Auction.com is being sued for allegedly inflating the price of one of its online listings through the use of a shill bidder.

Google invested $50 million in the site in March, according to the New York Post. The suit is expected to go to trial next year.

Village at Redlands Group claims in the lawsuit that Auction.com allegedly either used a shill or turned a bidder into one while auctioning off cottages for $7.4 million. The houses are located roughly 65 miles east of Los Angeles, the newspaper reported. VRG charges that a bid of $5.4 million would have been enough to secure the property. According to the lawsuit, Auction.com was working with the property’s loan holder to “unfairly inflate the price that would be paid by a qualified bidder,” the Post reported.

Property agents have complained about the website before, which uses anonymous bidders on behalf of sellers to make sure the minimum price for a property is met, according to the newspaper. Auction.com, however, doesn’t consider that a shill bid. The website has denied that it uses such bidders. [NYP] — Claire Moses

For David Foster of Chicago, it was a stunning and welcome early Christmas present for him, his wife and three young children.

The Senate’s 11th-hour extension of the Mortgage Forgiveness Debt Relief Act through Dec. 31 will save Foster, who works for a nonprofit ministry group, from having to pay the IRS about $28,000 next year on $100,000 of mortgage debt canceled by his bank as part of a short sale on his condo.

Before the Senate’s action, he told me he had no idea “how or where we could come up with” that sort of money.

The federal tax code treats forgiven debt as ordinary income to the borrower, taxable at regular rates. But under an exception that took effect in 2007, qualified home mortgage debt that is canceled by a lender as part of a short sale, loan modification or foreclosure is treated as non-taxable. However, that exception expired last Dec. 31 and its renewal has been in doubt all year — leaving short-sellers such as Foster unsure whether they would be facing crushing taxes in 2015.

Thousands of Americans who completed short sales during 2014 and received cancellations of mortgage debt by banks had reason to celebrate when the Senate extended the exception for transactions just before adjourning for the holidays. According to data prepared for this column by research firm RealtyTrac, nearly 122,000 short sales went to closing nationwide between January and October, involving an estimated average debt forgiveness of about $88,500. The average seller had a mortgage balance one and a half times higher than the market value of the house.

In a short sale, an underwater homeowner agrees to sell the property to a new purchaser, typically for a price well below what is owed to the bank. If the bank agrees to the sale, the proceeds pay off part of the loan balance and the bank forgives — writes off — the rest.

Richard Eastern, CEO of Washington Property Solutions Inc. in Bellevue, Washington, a brokerage specializing in short sales, says people such as Foster are the lucky ones. Substantial numbers of owners have been rushing to beat the Dec. 31 deadline. “I got a call today from a client who asked, ‘we’re still scheduled for Dec. 29, right?’” Eastern recounted. The typical client served by his firm is an underwater owner with $300,000 of mortgage debt on a $200,000 house.

But Eastern said he has dozens of other listings where a 2014 closing won’t be possible, and some of these clients “are now devastated” in the wake of the Senate’s limitation of the extension to 2014 transactions only. They could be plunging into a federal tax policy black hole when they complete their sales next year, uncertain of any further extension of the debt forgiveness law.

Eastern is mystified that Congress could not have lengthened the extension to two years — retroactive for 2014 and good through Dec. 31, 2015 — a provision approved in a bipartisan vote by the Senate Finance Committee last summer. He predicts that without protection from heavy tax burdens, many underwater owners will opt instead for bankruptcy filings. In some cases, they might be able to qualify for an “insolvency” declaration, which could wipe away tax liability for unpaid mortgage balances.

How do you know whether your short sale, loan modification or foreclosure is covered by the extension for 2014? Though a tax professional familiar with the law should be your best guide, here are the key tests you’ll need to pass: The house securing the mortgage debt must be your principal residence. The maximum amount of debt that qualifies for relief is $2 million ($1 million if you are married filing taxes singly.) Any portion of the mortgage debt forgiven that was used for purposes other than improving or building the house — say you refinanced, pulled cash out and used it to buy a car — will not qualify for the exclusion and may be taxable.

What are the prospects that Congress will extend the law for 2015, covering people who didn’t quite make the deadline for 2014? Not great. The Republican tax policy leadership in the House favors broad tax reforms in the upcoming session and wants to put an end to temporary tax code benefits that require periodic extensions. Unless proponents can make a strong case for mortgage debt relief as a permanent part of the tax code, it will be tough to get it extended again.