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Why (as in yaverbaum)
Center, which transformed an area of urban blight in Atlanta and included the first of his atrium-centered hotels, the Hyatt Regency. He wanted to do a similar thing in New York, this time with an extremely large convention hotel anchoring the revitalization project, and Mayor John Lindsay’s administration was delighted to have him try. The tar- get area was Times Square, which, at that time, was more known for its porno shops and attendant squalor than for anything else (other than its annual hosting of vast crowds, usually freezing but fortified with alcohol, ringing in the New Year).
Portman, who had dealt with Flora when she was at Milbank, had located what he believed to be a suitable site on Times Square. A part- nership controlled by Peter Jay Sharp and Jerome L. Greene then owned, or had options to purchase or lease (and therefore controlled), the entire blockfront between West 45th and West 46th Streets on the west side of Broadway, the adjacent Coronet Theatre, the Piccadilly Hotel, and some other small adjacent properties. Sharp was a wily and very successful developer whose name is now on a theater that is adja- cent to Juilliard. Greene was an extremely wealthy real estate developer who was then a senior partner at a midtown law firm known as Marshall Bratter Greene Allison & Tucker, and whose name is now on the build- ing that houses Columbia Law School. Fred Wilpon and Saul Katz, then brokers but now principals in Sterling Equities (of Bernard Madoff fame) and the New York Mets, were among the junior investors in the endeavor. The Sharp-Greene group had assembled the property but apparently could not develop it and were faced with either “dropping the site” to their lenders or surrendering a good bit of the control.5 They
5. “Dropping the site” meant abandoning the project and giving the property back to the bank. This was not as terrible a result as one might imagine, for, as I came to learn from Flora and Portman’s adversaries, the cardinal rule in real estate investment is to avoid personal liability, to be willing to lose your investment in an asset but not to be exposed to a suit as a consequence of which your personal assets could be taken. Thus, all well-constructed transactions would be done on a “non-recourse basis,” meaning that the lender would not have recourse to—could not sue to seize or realize on the value of—the developer’s home, bank accounts, automobiles, etc., to satisfy the debt. Only the asset that was financed could be forfeited in the event of a default.
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