Nov 18, 2010
RBC has taken ownership of the Lipstick Building, the famous Manhattan office tower where Bernard Madoff orchestrated his Ponzi crimes.
The building’s owner, Metropolitan 885 Third Avenue Leasehold LLC, filed Chapter 11 on Tuesday after Royal Bank of Canada its main lender, sued in June to force a sale of the property following a default on a $210 million loan.
RBC will now take take full control of the building through a newly formed and aptly named company, New Lipstick LLC.
The building, one of the most recognizable in Manhattan, received its name from its shape and color, which resemble a tube of lipstick. The unusual shape uses less space at the base than a regular skyscraper providing more room for the high numbers of pedestrians who travel via Third Avenue.
“The recent violent downturn in the building and real estate markets have had a significant impact on the debtor’s operations,” the company said in an affidavit filed in court. “Vacancy rates have increased making it more challenging to service the debt on the property. Renewal lease rates have also been lower than anticipated.”
Commercial vacancy rates in Manhattan were at 12.1 per cent in the third quarter, the highest level in six years, according to Cushman & Wakefield.