Give Till it Durst! Mogul Investing $300 M. in Financially Troubled Properties

New York’s own organic-farming real estate mogul Douglas Durst is getting into the distressed asset-buying business, with plans to invest up to $300 million of his own moolah in a fund that he’s creating with his frequent collaborator, developer Sidney Fetner Associates. 

“The purpose of the fund will be to invest in distressed properties,” Mr. Durst said. “Bricks-and-mortar [properties].”

The fund should be active by spring 2009, around the time Mr. Durst expects a bunch of financially troubled properties, in the city and elsewhere, to finally be coming to market.

“It just takes a while for these things to get to the level where they are available,” Mr. Durst said. “They have to go through legal procedures.”

Mr. Durst is particularly well positioned to buy distressed assets, given the roaring success of his Bank of America Tower at One Bryant Park, which is anchor-tenanted by a solvent bank, and which Mr. Durst leased up for fantastic rents just before the collapse of the financial system. But he doesn’t look to be the only New York developer cashing in on the chaotic markets.

The kindly Adam R. Rose, co-president of the 80-year-old Rose Associates, was loath to give the appearance of gloating about the firm’s position amid the general tribulations, but he did say that “as a business with more than 80 years of history in New York, we have ridden out numerous cycles.”

“Unlike some more recent entrants to New York real estate, we never ceased to keep our eye on limiting the downside,” Mr. Rose continued. “It’s easy in the exuberance and excitement of a frothy market to get distracted. But our clients and partners expect us to simultaneously limit risk. In fact, we anticipate opportunities to present themselves in the next 18 months for which we are uniquely positioned, because we are not distracted by any problems of our own and we have full capacity to execute on behalf of others.”

And just last week, scion Lloyd Goldman closed on 1372 Broadway for $274 million, significantly less than the price tag affixed to the building in 2007. An associate of his told The Observer that Mr. Goldman was “licking his chops” to snap up buildings in the marketplace.

Whether the rest of the New York families, like the Resnicks and Olnicks and Zeckendorfs, join in the game remains to be seen.

Eric Michael Anton, executive managing director at Eastern Consolidated, was somewhat dubious.

“Nobody has more experience than the New York families that have been owners for decades, but I think, just like the last cycle, these owners will be conservative and will limit new acquisitions,” he said. “It’s probably going to be another crop of young entrepreneurs teamed up with investment funds that are the most aggressive buyers in the coming years.”

drubinstein@observer.com

Give Till it Durst! Mogul Investing $300 M. in Financially Troubled Properties