On a recent evening at the 92nd Street Y, Stephen Ross, chairman of the Related Companies, reflected on four decades of transformation—for the city, where he has built more apartments than almost any other developer of his generation, and also for himself. In September, Mr. Ross, 72, stepped down as the CEO of the once-humble affordable housing outfit he transformed into a luxury real estate behemoth.

Not that he’s stepping aside. There he was a few weeks later, alongside Mayor Bloomberg and Council Speaker Christine Quinn on the formerly desolate Far West Side, breaking ground on the Hudson Yards project, a glass and steel city within a city that is actually larger, in terms of square footage, than downtown Portland or downtown Baltimore.

“What’s good for the city is the first thing,” Mr. Ross told the audience at the Y. “I think if you really take that into consideration, the opportunities open up.”

On stage, Mr. Ross wore a navy suit and pink tie and sat next to fellow real estate mogul William Mack of AREA Property Advisors, as Businessweek senior editor Diane Brady asked the two friends about their long careers. About a decade ago, Messrs. Ross and Mack teamed up to build the Time Warner Center, the twin-towered behemoth that rose on Columbus Circle in the wake of the Sept. 11, 2001 attacks, an unwitting glass echo of what had been lost. Before the project began to rise, doubts were widespread, but Mr. Ross recognized a unique combination of location, transportation and public support that has become the hallmark of his success.

Even before the attacks, the city had been “muddling along,” as Mr. Ross put it, but he could never forget gazing at the site, home to Robert Moses’s loathsome Coliseum, from his old office on the other side of the park, at 59th Street and Madison. The opportunity, with the park and subway, at the axis of Midtown and uptown, was undeniable. “The location was superb,” Mr. Ross said. “I looked at it as the best site in the city that had been undeveloped. I really thought it deserved a world-class project.”

From his revival of Union Square to his partnerships with Equinox and Danny Meyer, everything has been preparing Mr. Ross and the Related Companies for creating the 26-acre, $12 billion Hudson Yards, the city’s 21st-century Rockefeller Center. The best views, the best services, the best address. “Everyone sees the potential now,” Mr. Ross boasted at the Y.

Related’s rise has been entwined with the rebirth of New York from a bankrupt dystopia into a glittering place of wealth. The evolution has undeniably improved safety and heightened public investment, but it has also perpetuated a view, held by some New Yorkers, that the city is losing its character and diversity to a wave of glassy boxes. While no single developer is responsible for this gentrification, Related’s trophy towers have strongly correlated with the luxury surge.

And no developer has navigated City Hall with such success. Mr. Ross became friends with Dan Doctoroff, the former deputy mayor for economic development in the Bloomberg administration, when the two were part of a group that bought the New York Islanders in 1997. Critics argued that their relationship gave Related an inside track on development bids, but others credited the company’s appetite for complexity and a willingness to take on daunting projects.

“He understands what’s needed on the city’s side,” said Steve Spinola, president of the Real Estate Board of New York, where Mr. Ross was chairman for two years. “He’s in it for the long haul.”

SUCCESS has enriched Mr. Ross, whose net worth is an estimated $3.1 billion, according to Forbes. He owns the Miami Dolphins and though a registered Democrat, became a champion of Mitt Romney in the recent presidential campaign, donating over $100,000.

And yet Related originated from disappointment. After graduating from law school and working as a tax attorney in his native Michigan in the 1960s, Mr. Ross arrived in New York to work at the now-defunct investment bank Bear Stearns. “I was working for a Wall Street firm, and I got fired for the wrong reasons,” he said at the 92nd Street Y. “The person I was working for didn’t really realize my capabilities.”

But as Mr. Ross noted in a 2009 graduation address at Michigan University’s School of Business, which bears his name after a $100 million donation, “Bear Stearns is gone. Steve Ross is still here.”

Mr. Ross wanted his business to be sustainable, without relying on boom and bust cycles, so he focused on affordable rental housing. His first projects were small apartment complexes financed by the U.S. Department of Housing and Urban Development (HUD) in Wasaka, R.I., and Middletown, N.Y. He then closed in on New York, building in Rockland and Westchester Counties and southern Connecticut.

Mr. Ross eventually entered Manhattan with an affordable housing project in 1976, and his big break came when he won a bid in 1980 for River Walk, a development site just north of Manhattan’s Stuyvesant Town.

Related won the rights to build some 1,800 apartments, a hotel and ample retail (a formula the company would replicate again and again), but the biggest prize was having the Related name run on the front page of The New York Times. This immediately led to more deals, in Battery Park City and on the Upper East Side. And thus his conquest of Manhattan began. “It was first survival and concentrating on a company, then it was a question of diversifying,” Mr. Ross said. “I knew I didn’t want to stay in affordable housing forever.” 

In the early 1990s, Manhattan’s Union Square was nicknamed “Needle Park.” “It was really dangerous back then,” said Robert K. Futterman, chairman and CEO of Robert K. Futterman & Associates, a top retail brokerage that has worked with Related on numerous projects. “Though it was a great transportation hub, it didn’t have great retail.”

The district’s historic buildings had begun giving way to newcomers, starting with Zeckendorf Towers, built in 1987 after the demolition of the Union Square Hotel. But Mr. Ross first focused on old buildings, partnering with Starwood Hotels and Resorts to convert a historic Beaux Arts building on the northeastern side of the park into the W Hotel. Related also owns the historic building on the north side now occupied by the massive Barnes & Noble, one of the bookseller’s top outlets.

Related’s biggest mark was 1 Union Square South, completed in 1999, which sits at the terminus of Park Avenue South and looms over the park. “It was a very important site as a focal point,” Mr. Ross said. Related has been lauded for the aesthetics of some of its projects, but not this one. A blank wall spans an entire city block, and it isn’t helped by the swirling digital clock Related commissioned to liven up the façade.

“The south side of Union Square has been trashed, from an architectural point of view,” said Simeon Bankoff, executive director of the Historic Districts Council.

Aesthetic questions aside, the building has been a financial coup. Monthly apartment rents now go as high as $17,000, and dozens of condos have sprung up around the park in the past decade as a result. “It was really one of the first urban power centers,” said Mr. Futterman.

As 1 Union Square South was rising, Related was bidding for what would become the Time Warner Center.

For two decades, Mort Zuckerman’s Boston Properties had tried and failed to make something of Robert Moses’s unloved old Coliseum. When his deal fell apart, the Giuliani administration put it out to bid. Mr. Ross quickly mobilized. He would give Jazz at Lincoln Center a prime view overlooking Central Park and rope in Richard Parsons, the Time Warner CEO, as the anchor tenant in the office portion of the tower.

“He’d been in 75 Rock for 35 years with no issues,” Mr. Ross recalled, referring to Time Warner’s old headquarters at Rockefeller Center. “I told him, ‘This isn’t about space, this is about showcasing your company. Nobody knows who you are; they think you’re a part of NBC.’ That struck a nerve.”

He also lured the Mandarin Oriental hotel chain and a clutch of Fifth Avenue brands, like Hugo Boss and Cole Haan, for a “vertical mall” in the base of the tower. A popular model in Chicago, such retail spaces have always struggled in New York, where storefronts are believed to be king.

In the end, Related beat out the likes of Tishman Speyer, Bruce Ratner and Donald Trump. Though the development seemed expensive at the time, costing $410 million for the site and $1.7 billion to build, it has paid off handsomely. “We stole it,” said Mr. Ross.
“It’s become a destination point.” said Rosemary Scanlon, dean of New York University’s Schack Institute of Real Estate. “There’s a lot of vision there, as well as courage.”

Paul Goldberger initially panned the structure in The New Yorker, calling the towers “banal.” Nevertheless, he commends the developer for the architectural diversity of its portfolio. “I think Related has been very good at bringing a range of serious architecture ideas into the mainstream,” he said. “They know that the market today won’t accept junk.” 

HUDSON YARDS is its own city, and not a small one at that. The shortest towers will be 75 stories high, and designed by some of the world’s best architects. The tallest will surpass the Empire State Building, with a higher observation deck. Hudson Yards will have its own cultural center and a mall twice the size of Time Warner Center, and nearly half the 26-acre site spanning eight city blocks will be given over to public open space. It will be as if someone has taken a massive swath of Midtown, perfected it, and dropped it on top of the once-desolate Far West Side. And it will only cost $12 billion and a dozen years to build.

The project reflects Related’s growing influence in City Hall. Three years ago, in a rare defeat, Related’s plan to convert the Kingsbridge Armory in the Bronx into a massive shopping mall was rejected by the City Council because Mr. Ross refused to agree to require that retailers there pay a living wage. Mr. Ross walked rather than back down. This year, Hudson Yards was exempted from a citywide living wage bill, which some critics claim was the result of a $34,000 donation to Ms. Quinn’s mayoral war chest.

Already, the area is filling in around him, with luxury buildings popping up in the once-unthinkable wasteland of 10th and 11th Avenues in the 40s and 50s. “Already, we’re getting our best rents in Chelsea,” Mr. Ross said. For proof, look to the nearby MiMA tower, in which TIAA-CREF just paid $551 million for a 70 percent stake, and where the top floor units rent in the $10,000 to $25,000 range. The tower is almost fully leased. It has a doggie spa, and it is at 42nd and 10th.

The case could of course be made that by burnishing all these outlying areas, Mr. Ross is leaving the city overpolished. Not only has he shifted from affordable to luxury housing, he’s fighting living wages for the working class while creating apartments that sell on average for more than a million dollars, and frequently tens of millions. If any developer represents the go-go highs of the Bloomberg era, it is Stephen Ross, even if his approach often leaves the average New Yorker on the sidelines, gazing up at glass peaks.

In 2017, Related plans to move its corporate headquarters from the Time Warner Center to Hudson Yards. And Mr. Ross will trade his Time Warner penthouse, with its Central Park view, for a fresh perspective atop what he calls the new heart of New York.

editorial@observer.com

Sure beats the golden arches. (Related)

As if there was not enough anticipation surrounding the construction of Hudson Yards, here is probably the one reason to trump any other: Danny Meyer will be setting up shop on the Far West Side.

The Related Companies and Union Square Hospitality announced a new partnership today, whereby Steve Ross and his globetrotting development company will take a stake in Union Square Events. While not encompassing all of the restauranteurs operations, USE offers more than just catering but also runs the sports venue operations for Mr. Meyers sprawling eatery empire, and now it will do even more. So no fine dining, necessarily, but Mr. Meyer will be offering a range of culinary options, from private residential dining to catering events in Hudson Yards buildings as well as operating restaurants and outdoor cafes.

In a way, Mr. Meyer is keeping things local, as his catering company was founded in the area in 2004 and even used to be named after the neighborhood. "We love the irony that USE was born seven years ago as ‘Hudson Yards Catering’ – and now one of our greatest opportunities to grow will be in Hudson Yards,” Mr. Meyer said in a statement.

The partnership will grow beyond the city, looking to open in other stadia and arenas around the nation, a fit that makes sense since Mr. Ross owns the Miami Dolphins. There are also opportunities in other Related projects around the world. "We look forward to fully integrating their experiential concepts into Hudson Yards and expanding the business through strategic opportunities in sports, entertainment and mixed-use developments both nationally and internationally," Mr. Ross said.

First Brooklyn, then the world.

mchaban [at] observer.com | @MC_NYC

Aside from Walmart, Nordstrom is the store every retail broker in the city dreams of harpooning and reeling into a new home. One prominent broker familiar with the store, the amount of space it needs and the rents it would probably be willing to pay estimates that the commission for handling its lease would be around $10 million.

But like a leviathan lurking beneath the waves, the department store has offered only fleeting glimpses around the city, most notably at several development sites and a few existing assets with the capacity to accommodate its sprawling footprint.

The scuttlebutt nowadays: Nordstrom is contemplating one of two leases, one at the West Side rail yards with the Related Companies or another at the base of Extell Development’s soaring new residential tower now rising at 157 West 57th Street.

Illustration by Zack Nipper

According to brokers familiar with Nordstrom’s search, the options are emblematic of the dilemma that has kept the retailer bouncing around Manhattan for years. The department store is ideally searching for a roughly 250,000-square-foot box, a commodity so rare in the city that the only major department stores that have it—Macy’s and Saks among a short list of others—are ones that have been established in the city for decades and hence had a chance to address their real estate needs before the market became as expensive and supply-starved as it is now.

The solution, of course, has been for Nordstrom to accept a smaller space with a layout that is atypical for a traditional department store.  Many brokers say the template for this configuration is the Bloomingdale’s on Broadway in Soho, where the retailer had to greatly reduce the size of its store and tailor its clothing line and layout to appeal to the type of shoppers in that neighborhood.

A similar reshuffling of the Nordstrom concept would likely be necessary to bring the chain to Extell’s project, brokers told The Commercial Observer. The attractiveness of the rail yards stems from an assumption that the company could design a building from the ground up to meet all of its specifications.

But the rail yards are considered a new frontier in the city with little retail connecting the site to Midtown, making a deal there a gamble if the neighborhood takes longer than expected to develop into a popular destination for shoppers.

Extell’s development, though perhaps ill fitting for Nordstrom, would place it at the center of Midtown and near the Time Warner Center, a successful high-end retail mall in Columbus Circle that has helped designate the neighborhood as a retail hub.

Nordstrom has been linked to that area before. Last year, developer Stephen Ross bought the mortgage on the office building 3 Columbus Circle with the intent to foreclose on the property, raze it and erect a new tower with Nordstrom in the base. The deal fizzled when Joe Moinian, 3 Columbus’s landlord, held onto the property by recapitalizing the building with SL Green.

The trade-off between location and compatibility has been a conflict for the company for more than five years. Nordstrom almost had a deal to move into an office tower that was to be built by Stephen Ross and Harry Macklowe on the former site of the Drake Hotel at 57th Street and Park Avenue.  A person directly involved in those talks said that lease eventually crumbled because Nordstrom pushed the physical limits of the project, insisting on towering ceiling heights and other amenities.

“They wanted 18-foot ceilings,” the person said. “You could literally do two office floors for every floor that they wanted. They placed themselves out of the game by needing too much.”

The office building at 650 Madison Avenue, not far from the Drake site, has also been a location that Nordstrom has considered. According to brokers, the issues plaguing that property centered around the likelihood that nearby department stores like Saks, Bloomingdale’s, Barneys and Bergdorf Goodman would balk at or even bar its vendors from supplying Nordstrom with the brands that they sell, which would essentially prevent Nordstrom from being competitive.

“None of the existing department stores are going to roll over and give into Nordstrom without a fight,” the broker said, adding that he wasn’t “100 percent certain that they have given up on 650 Madison.”

Perhaps out of necessity, the company has poked around downtown, reportedly checking out an anchor tenancy at the World Financial Center office complex as well as the retail being built at the World Trade Center. Here again, brokers said, Nordstrom has expressed a preference to be in Midtown.

dgeiger@observer.com

When representatives from Walmart, the nation’s largest retailer, waltz into the New York Hilton for this year’s two-day International Council of Shopping Centers conference, many of the city’s most intrepid retail brokers will be close behind them, perhaps even plying those officials with compliments, dinner invitations and business opportunities.

The Category Killer.

So it goes for the 50-year-old, Arkansas-based retail chain, which since 2005 has continued to seek big-box space in New York City’s five boroughs despite thrice being spurned by the City Council, civic groups and labor unions upset with the company’s decision to roll back health care coverage for part-time workers and raise premiums for full-time staff.

As retail brokers told The Commercial Observer last week, however, the chain continues to draw flirtatious advances from agents attempting to land what, no doubt, would be one of the city’s biggest leasing assignments in years. Because the company has no dedicated real estate broker, most continue to send their love, some even on a weekly or monthly basis.

“They’re constantly calling them,” said Patrick Breslin, an executive vice president of East Coast Retail Services for Studley, who said he has observed colleagues fawn over Walmart executives. “It’s a relationship business.”

As for a dinner audience, however, Walmart has a stricter policy than other large-scale retailers, such as K-Mart or Target, according to brokers who said the chain has turned down dinner invitations due to a long-standing restriction.

“When it comes to accepting stuff, Walmart is one of the leaders in banishing that from the business,” said Mr. Breslin. “I was at a lunch once with some Walmart guys and a real estate developer who represented Walmart,” added Mr. Breslin.

“I was just tagging along. I just happened to be in the city that day, and he said come out for lunch with me. He went to pay the bill, and the two Walmart guys were whipping out their cash and checkbooks to pay their portion of the bill.”

Still, the chain came close in 2005 to setting up shop in a Vornado Properties-owned, 132,000-square-foot space in Rego Park, Queens, but it was met with swift opposition by City Council members and other public officials who decried its tendency to gobble up small mom-and-pop stores in its path. Walmart and Vornado eventually backed away from the plans.

Since then, other big-box retailers with less political controversy have opened up throughout the outer boroughs: Costco, Century 21, Kohl’s, B.J.’s Wholesale Club, Target, even German retailer Aldi.

In the meantime, Related Companies has reportedly been speaking with Wal-Mart about moving into a 650,000-square-foot site in its Gateway II shopping center in East New York, Brooklyn. The City Council and many public officials remain opposed to any such development, including State Senator Diane Savino, who has criticized the Related Companies for its Wal-Mart overtures.

Three other Queens politicians, meanwhile, sent a letter to Related chief executive Stephen Ross urging him not to bring the retailer to Gateway II or any other Related-owned New York City location.

In the meantime, a long line of brokers and landlords made overtures at a booth tended by Walmart at the ICSC conference on Monday, but most were referred to a representative of the chain’s “Real Estate Directors East” team, Mary Rottler, who, one Walmart representative said, “would be at the conference [Tuesday.]”

drosen@observer.com

Coach will move its corporate headquarters and consolidate three New York City offices into the building by 2015. The 1.8 million-square-foot tower, at the northwest corner of West 30^th Street and Tenth Avenue, is one of 14 residential, commercial and retail assets envisioned by the Related Companies at its far West Side development site.

The Coach House.

“Since its founding 70 years ago, in a loft not far from here, Coach has been a recognized leader in fashion accessory design and production,” said Mayor Bloomberg during a groundbreaking earlier today attended by Coach execs and Related officials. “Now, by announcing its intent to anchor a major new Hudson Yards office tower, being developed by the Related Companies, Coach is also leading the way into New York’s future.”

Coach currently owns its offices at 516 West 34^th Street, plus another small building that adjoins it—approximately 250,000 square feet combined, a source said. The company also leases office space at 450 West 33^rd Street, which expires in 2015.

CBRE Chief Executive Mary Ann Tighe, who represented Coach in the transaction alongside Vice Chairman Greg Tosko, noted that the handbag purveyor’s 34^th Street building will be a hot commodity, now that it’s hit the market, because of its zoning.

“They can build very tall buildings on those sites,” said Ms. Tighe. “If I were a betting person, I would bet it would [be developed as] a residential tower.”

Related Companies will also move its offices to Hudson Yards, Chief Executive Stephen Ross announced at the press conference attended by Bloomberg and an assortment of other politicians and real estate industry leaders. It is not yet known which tower Related will occupy, or how many feet they will take, a spokesperson for Related said.

Coach has been in the neighborhood for decades and in Manhattan for 70 years. They began planning to consolidate their offices more than four years ago but ultimately chose the Hudson Yards complex for its proximity to the High Line Park, Ms. Tighe said.

Tenants who take advantage of leasing the first five million square feet of commercial space at the complex will receive a 40 percent break in “pilot payments,” while those inking deals for the next five million feet will get a 25 percent break, said a spokesman for the Related Companies. These tax abatements are good for 15 years, the spokesperson said.

Mr. Ross swept past his opponent, Joe Moinian, the building's owner and chairman of his own development firm, sitting upright on a front-row bench closer to the entrance. A big knot in Mr. Moinian's baby-blue silk tie hugged his neck. Mr. Ross sat down on a bench of his own, front and center, and crossed his legs, knees stacked. "Mr. Ross, I haven't seen you in years," said Judge Charles Ramos from the other side of the room. His robe hung open below his bow tie. "It's like an old-folks home."

The city's most powerful developer grinned and arched his eyebrows. "Thank you," Mr. Ross said. A black ribbed sock and black hand-sewn leather loafer with tassels dangled from below the right cuff of his navy pinstriped suit. His plan to take over Mr. Moinian's building by controlling the debt is unusual for Mr. Ross, but Columbus Circle is his home turf: He keeps a condo and office in the Time Warner Center, which Related co-developed after helping demolish Robert Moses' Coliseum. Knocking down Mr. Moinian's building could be the next step in remaking the area.

But at 3 Columbus Circle, Mr. Ross owns only the $250 million mortgage, which collects $70,000 in interest every day. After Mr. Moinian stopped making payments in January, Mr. Ross and his financier, Deutsche Bank German American Capital Corporation, accelerated the mortgage, demanding full payment and an additional $54 million as a prepayment penalty. It was the first step toward foreclosure and taking the building away from Mr. Moinian, who has already seen his 20 million-square-foot empire shrink during the Great Recession (Barclays Capital seized 475 Fifth Avenue from Mr. Monian and a partner in 2009).

FOR A LOOK AT THE TEMPESTUOUS HISTORY OF COLUMBUS CIRCLE, SEE THE CASTLES AND CLASHES OF COLUMBUS CIRCLE. >>

Mr. Ross appeared on CNBC's Squawk Box on Sept. 10 to talk about the real estate market and the Dolphins alongside Richard LeFrak. Mr. Ross' picture floated onscreen above the title "KING OF COLUMBUS CIRCLE."

"We bought a note on a property that was kind of adjacent to Time Warner Center," he told the show's host, Carl Quintanilla, just after noon. "We saw that there was a higher and better use and we bought the note hoping to do something there." CNBC cut to B-roll of 3 Columbus Circle with the Moinian Group's "M" logo on the scaffolding in clear view.

When Mr. Moinian bought the building, a homely red-brick tower built in the 1920s at 1775 Broadway for General Motors, for $130 million in 2000, it was mostly full. Newsweek kept offices there until 2009. Before credit dried up, Mr. Moinian began a bold plan to raise the building's profile, investing $175 million for renovations, including a fresh sheath of glass. He changed the name to 3 Columbus Circle and raised asking rents.

It's not the ugliest building in the area, but the glass, which catches the reflection of Lord Norman Foster's Hearst Tower across the street, isn't fooling anyone. According to media reports, Mr. Ross would like to demolish Mr. Moinian's tower and replace it with one designed by a famous architect; he is planning to move the city's first Nordstrom's to retail space on the lower floors to anchor the tower, and fill the upper floors with 140 condominiums; and the company began shopping for architects in September. Related declined to comment.

"It's just not something that I think a lender should be saying," Stephen Meister, Mr. Monian's lawyer, told The Observer over the phone on Monday. Mr. Ross has stipulated that any new tenant in the building would have to agree to a six-month demolition clause with no provision for reimbursement.

Between Mr. Moinian's raising rent in the building and the lenders' attempts to scare off new tenants, 3 Columbus Circle is now less than 20 percent occupied. On Monday, a leasing advertisement on the building's black scaffolding read, in big white letters, "contiguous block of up to 650,000 RSF"--that's in a 770,000-square-foot building. From CNN's 10th-floor cafeteria across the street in the Time Warner Center on Monday afternoon, The Observer counted four construction workers painting sealant around a drain and installing glass sheathing on the fourth-floor balcony--perhaps dutifully polishing the Titanic's banister.

In court earlier this month, Mr. Meister, a litigator's litigator wearing a dark pinstriped suit that offset his razorback brown hair, told Judge Ramos that he wants to perform what he calls "a Ross-ectomy." There was hushed laughter. The judge slouched and gazed through half-moon spectacles at the tip of his nose.

"It's not that there are bad vibes," Mr. Meister continued later.

Judge Ramos was amused: "Bad vibes?"

"It's that there is a cancer in the building!" Mr. Meister bellowed on from a podium next to the lawyers' table. "I have to get rid of Mr. Ross. I have to get rid of Mr. Ross, O.K.? I have got the money; he's right here." Mr. Meister slapped his right hand down on the shoulder of a plump man in a gray suit sitting at his hip. The only way that Mr. Moinian can take the scalpel to Mr. Ross is by paying off his $250 million mortgage.

The gray suit was a representative for SL Green, the publicly traded real estate company, run by Marc Holliday, that controls more than 30 percent of the office space in Manhattan. Mr. Holliday agreed in October to help Mr. Moinian refinance the building as part of a joint venture.

The biggest sticking point for Mr. Moinian is the $54 million prepayment penalty. Lawyers for both sides spent the majority of the 63 minutes in court arguing over the language that describes it in the mortgage document. Do 10 words between two commas on page 99--"provided that the Loan has not been accelerated by Lender," which it has been--modify the words ahead of the first comma or behind the second? And so on.

Halfway through the hearing, Judge Ramos examined the documents in front of him, head in chin, and sighed. He pushed his glasses up his nose. There was silence for one minute and 15 seconds as he stared at the mortgage. At the back of the room, an executive sitting to Mr. Ross' right wrapped his arm over the developer's shoulder and began whispering in his ear. Mr. Ross stared down at his dangling right loafer and nodded gently. At the end of the silence, Judge Ramos scratched his head and read the clause aloud. "... And then there's a comma."

"I am not going to try to argue with your logic," the judge said, "but I have to deal with the document as written."

Later, when discussion of existing examples of foreclosure practice came to a head, Mr. Meister gently hip-checked the skinnier Mark Walfish, Deutsche Bank and Related's lawyer, away from the podium to get a point in. Mr. Walfish was not amused: "Judge, this is great--this is like The Jerry [Springer] Show."

"I want to talk to the two of you in the back," the judge said. Mr. Meister continued to press his point forward. "In the back, right now!" The lawyers followed the judge out of the room.

Twenty minutes later, the lawyers emerged from the judge's chambers. "I need Joe. Is Joe here?" called Mr. Meister. Mr. Moinian and Mr. Ross, still yet to acknowledge each other, returned with their lawyers to see the judge. Twenty minutes later, they left without a word.

Nothing was settled.

On Nov. 24, the day before Thanksgiving, a representative for Mr. Meister's office dropped off at the State Supreme Court a Bank of America cashier's check signed by SL Green Management for $258,550,838.52. The numbers run to the edge of the paper. If Mr. Ross picks up the check by Dec. 6, the dispute is over and Mr. Moinian will have a new financier. If they leave the check in the court's vault, litigation over the prepayment penalty will continue, with Mr. Ross losing more than $70,000 in interest daily.

Nobody has any idea what Mr. Ross' next move will be.

"By the way, why would any lender turn that down?" Mr. Meister asked The Observer, referring to an earlier offer turned down by the lenders that included the prepayment penalty in escrow. "Think about that! Why would any lender whose real goal is to get repaid turn that down? That proves that they're predatory! The only reason to turn that down is because they want to steal the building. That's the only reason, O.K.?"

zturner@observer.com / @zekeft

Boston Properties, the real estate firm which the Daily News publisher chairs, on Monday pulled out of a three-way race to buy a stake in One World Trade Center, according to multiple government officials and a real estate executive. Mr. Zuckerman leaves behind just two to battle for the giant glass skyscraper previously named the Freedom Tower, currently under construction downtown: Stephen Ross, chairman of the Related Companies and the developer of the Time Warner Center; and Douglas Durst, developer of the Bank of America Tower and 4 Times Square.

Boston's rationale for dropping out after five months of talks is not entirely clear, and in a letter to the Port Authority of New York and New Jersey, which is developing the tower, Boston Properties senior vice president Robert Selsam was brief.

"Given the increasing scale of our own corporate activities, upon reflection we have decided it is best if we withdraw from further consideration," he wrote in a three-sentence letter. (Mr. Selsam declined to comment beyond the letter.)

The next steps for Mr. Durst and Mr. Ross are to pitch the authority's board of commissioners, where each are slated to give lengthy presentations to boost their bids, which call for about $100 million in investment in the tower. The authority is aiming to select one of the two in June.

The board has shown an intense interest in having influence in the selection, something of an unusual step at the agency, which, on smaller projects, typically chooses a winning bidder and then presents that choice to the board. The board is dominated by real estate executives, attorneys and others with political ties, split between appointments by governors of New Jersey and New York.

Earlier this month, in a meeting with board members, the Port Authority's staff raised some concerns about Boston Properties' financials in relation to the other two, according to a board member present. There was also discussion of narrowing the field to two bidders before the developers made presentations, according to that member, a concept that multiple people on the board disliked given that it would further narrow options.

A Port Authority spokesman, Stephen Sigmund, issued this statement:

Boston Properties has decided to withdraw from the Port Authority's selection process for an equity partner in One World Trade Center. We have very much appreciated their participation and the process has benefited from such a high-caliber organization. The Durst Organization and Related Companies remain active participants in the process and we look forward to a private sector developer playing a significant role in the long-term success of the building.

ebrown@observer.com

The deal calls for Related to begin paying rent on the property, a 26-acre swath of land over the LIRR yards south of the Javits Center, once the economy hits a set of triggers showing improvement. Previously, Related was to begin paying rent shortly after it signed a contract, regardless of economic conditions.

The deal has been pushed off repeatedly, and last year the two parties agreed to wait another year until the economy improved. In the meantime, Related did not try to renegotiate the amount of the payment, although by installing the economic triggers, it delays payments that the cash-poor M.T.A. had budgeted for.

With the final papers of the deal still unfinished, the contract will not be signed Monday (or Wednesday, when the M.T.A.'s full board has its meeting), according to multiple people familiar with the agreement; however, neither side has expressed worries that the deal is imperiled.

ebrown@observer.com 

For the second time in three months, and the fourth time in a year and a half, the anticipated contract for the Related Companies to develop the 26-acre West Side rail yards has been delayed. Related and the M.T.A., which owns the rail yards near the Javits Center and initially granted Related the development rights in May 2008, have agreed to extend by one month a March 31 deadline for signing the contract to develop the site. An M.T.A. spokesman confirmed the extension.

Multiple people familiar with the discussions said that the process of readying the legal documents has dragged on, taking longer than expected.

This is, in some ways, a repeat of two months ago, when Related faced a Jan. 31 deadline to sign onto a contract before it was extended until March. However, at that point, Related renegotiated the terms in the face of the recession. Whereas in the initial deal, Related was to sign a lease worth $1 billion in payments to the M.T.A. over 99 years, now the firm will not have to close on the deal until the economy hits certain specific benchmarks, showing improvements in such areas as vacancy rates.

This time, Related is not expected to renegotiate the terms, and people familiar with discussions did not express worry that the firm was delaying due to financial concerns. The development firm has invested tens of millions thus far in the planning for the site, which, if ever completed, would entail $15 billion in construction on a commercial, residential and retail mega-complex.

With that said, Related's 33 percent partner in the deal, Goldman Sachs, pulled out in January, so the firm probably wouldn't mind another investor.

Should Related indeed complete the contract, it would be required to put $21.75 million into escrow, with another $21.75 million to follow. 

ebrown@observer.com

The Port Authority, the New York-New Jersey-controlled bureaucracy that is developing the tower and shopping around an ownership stake, late last month dropped two developers vying to take a piece of the 1,776-foot tower, according to people familiar with the process. Out of the running: Steven Roth's Vornado Realty Trust and Brookfield Properties, run by CEO Ric Clark.

That leaves four developers standing: Mort Zuckerman, Douglas Durst, Stephen Ross and Gerald Hines, who respectively control Boston Properties, the Durst Organization, the Related Companies and Texas-based Hines Interests.

The skyscraper is on the rise in Lower Manhattan, with a hulk of steel currently more than 200 feet above ground. With symbolism and security guiding its design and purpose, it is surely a money drain for the Port Authority, at least in the short run, and costs more than $3 billion, twice the price of the 2,716-foot Burj Khalifa in Dubai, where labor is cheaper.

Thus the agency, searching for the developers with brokerage Cushman Wakefield, wants to bring in some money-it's looking for an investment of about $100 million to take a piece of equity-and to install a well-known developer as the public face of the tower.

Of course, this is not the first time the agency has tried to sell off a piece of the tower. Back during the Spitzer administration, Mr. Ross was in advanced discussions to put up capital and claim the tower for Related Companies as part of a different financing arrangement, according to people familiar with the discussions at the time. That plan fell apart, and two years later, here we are again.

In a statement, the Port Authority said it is "encouraged by the strong private sector interest" in the tower.