Condo king dethroned

[FarCenter]

With one building gone, more on brink, Yair Levy leads pack of city's troubled developers

Last month, owners of 45 apartments at a disastrous 303-unit condominium conversion in Battery Park City sued developer Yair Levy for $100 million, alleging fraud. The suit came nine months after he defaulted on the $165 million mortgage for the building located at 225 Rector Place. That project now faces a possible foreclosure that Mr. Levy's lawyers in court filings say puts him at risk of “losing it all.”

Uptown, Mr. Levy's luck is no better. In September, after the lender on his Park Columbus conversion on West 87th Street sued him for defaulting on his loan, Mr. Levy filed for bankruptcy on the property.

Many developers have fallen on hard times in recent years. Few have fallen further and faster than Mr. Levy, the man who just six years ago was widely hailed as New York's “condo king” for his rapid-fire efforts to snap up faded downtown office buildings and convert them to upscale residences.

Mr. Levy's company, YL Real Estate Developers, which he founded in 1998, soared to prominence on the back of ever-bigger deals. His activity peaked in 2005, when he snapped up three huge apartment buildings, planning to convert their nearly 1,000 units to condos. Those three—Sheffield57, Rector Square and Park Columbus—were supposed to solidify his reign. Instead, they are proving his undoing.

“He is a developer who tried to ride the real estate wave and was unsuccessful,” says Marc Held of law firm Lazarowitz & Manganillo, who is representing the Rector Square tenants. “Unfortunately, with his mistake, a lot of condo owners got hurt.”

Mr. Levy's empire began to unravel in spectacular fashion this summer when lenders foreclosed on the 597-unit Sheffield57—making it the biggest failed condo conversion in city history—and auctioned it off for $120 million. Mr. Levy, along with partners Kent Swig and Serge Hoyda, had bought the property for $418 million only four years earlier.

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