Sunday, March 23, 2008

Is Frank Lembi the Next Harry Macklowe?

For those who haven't been following the New York commercial property market, Harry Macklowe is the guy who paid the high. He purchased seven properties from Equity Office Properties last year, putting up $50 million in equity and financing the balance of $7 billion with short term loans. He recently defaulted on the loans and is now selling the GM building to raise cash and handing over titles on the seven buildings to his lenders. Why does Harry Macklowe matter? Because he is a perfect example of what was wrong with the lending environment for the past few years that clearly extended beyond residential mortgages. Lenders bent over backwards to give this guy short term loans so he could overpay for properties where the cash flows didn't cover the debt service. You have to wonder, how many more Harry Macklowes are out there on the verge of blowing-out because the credit party is over?

Frank Lembi, founder of Skyline Realty, may be a mini-Macklowe in the making. Skyline has purchased close to $1 billion worth of multi-family properties in the San Francisco market in the past couple of years. The properties were apparently financed with 92% LTV loans (i.e. the company only had to put up 8% of the equity). If you read the two links provided below (one written in 2005, and the other in 2008), you'll see that Lembi's brilliant strategy of outbidding his competitors by about 20% for virtually EVERY multi-family property on the market in San Francisco and then financing the purchases with Wall Street money has paid off huge! Apparently, he is now desperately puking multi-family properties to raise cash to pay the bills. There's that pesky negative cash flow thing rearing its ugly head. 1330 Bush, a property that was financed with a $48.6 million loan from Nomura (according to propertyshark.com) is now on the market for $34.9 million, after being marked down from $39 million a month ago. Any takers? Anyone? Anyone? Tell you what, I'm $1 bid. And I'll even pay cash...

Harry Macklowe

Frank Lembi 2005 article

Frank Lembi 2008 article

8 comments:

Hanna said...

If you can tell me how I can apply this logic to buying my first shitty studio in NY, I'll give you a buck.

Anonymous said...

I wish someone would talk about the manipulative sweet talking a-- h---s that work for him like the young twink alavi and grandson

Anonymous said...

http://en.wikipedia.org/wiki/CitiApartments great summary of the loosers.. these guys having been taking advantage of people for a long time. Look up various people on their team by googling press releases: Taylor Lembi, Kian Alavi, Walter Lembi, Frank Lembi, Olivia Lembi,et... It is incredible that the same people that brought us the Savings and Loan crisis are bringing us the curren financial melt down

Anonymous said...

Lembi will pull through. If not, he'll still be worth billions.

Anonymous said...

Frank, Walter and Taylor will still be worth more then any of you put together.

Anonymous said...

Never in my life have I come across such filth. From the inside out the whole lot is rotten to the core. They may indeed be laughing all the way to the bank, but the rest of us consider them a total joke.

Anonymous said...

Where are his pupper crook team hiding now? I wonder if Alavi and Lembi Jr. are cutteling and slumbering together somewhere.

Anonymous said...

Now we have another aspiring crook William Faidi buying Lembi's properties!!!!!!!!!! watch him crash and burn some other peoples money.