EDITOR’S NOTE: New York Observer catches up with LA’s CIM Group’s invasion of the Big Apple, a firm that has benefited handsomely from the its insider connections to LA City Hall and the mayor’s pal, Ari Swiller as well as being labeled LA’s “richest slumlord.” Here’s the New York takeout:
By Laura Kusisto
The genesis of CIM is not widely known, but the legend goes like this: In 1986 two Israeli soldiers, who worked on a kibbutz together, came to California on vacation and decided to stay. They started a small landscaping business and bought a couple of cheap apartment buildings, when one day they struck up a conversation about grass or something with Richard Ressler, an alum of ’80s junk-bond yard Drexel Burnham.
Using that same knack for unorthodox investments, the trio started CIM in 1994, and its investment funds have spread across the country, buying up thousands of apartment units, as well as malls, hotels and theaters in second-tier markets such as L.A., Las Vegas and Dallas.
“They are a vulture,” said Scott Adams, chief urban redevelopment officer for Las Vegas, who has worked with CIM. “I mean that in a good way.” With the country’s glitziest strips littered with victims of the worst real estate bust in at least a decade, we need scavengers to feed off the wounded.
Now the vulture has landed here too. CIM bought Harry Macklowe’s distressed Drake Hotel site for $305 million in cash last January. More recently, it’s bought Sapir’s William Beaver House and a stake in 11 Madison, and partnered with the troubled developer on the Trump SoHo.
What happens in Vegas, a kingdom of slapdash hotels and casinos where by Mr. Adams’ admission “almost anybody could be a developer,” once stayed in Vegas. But New York is now littered with ailing condo and hotel projects once owned by some of the city’s most prominent real estate figures.
“They came in like a white knight,” said Dan Fasulo, managing director of research at Real Capital Analytics. Well, sort of.
“They play behind the scenes,” he said. “They are obviously pursuing a strategy not to compete with the big boys that are getting involved in controlled auctions.”
I keep reading that word “distressed” and have no idea what it really means. I’ll you what though, this is total BULLSHIT. This is why the City is broke and falling apart with the incompetent goons in city hall.
“”"”Billionaire Eli Broad’s foundation will be reimbursed for the $52 million cost of building a parking structure to serve his new art museum under a deal approved Tuesday by City Council”"”
I wish the politicians would be more positive. When the public is not accepting their money-hungry decisions because
they are poor. They are made so that the pols can be more powerful not to keep the city working in a clean, well-maintained
way. They will not win ultimately. We, the people, will prevail. All of us who care need to keep reminding those who seem
disinterested that we need to stick together in order to win. Vote in every election. Another one is May 17. Next week!!!~
CIM is no different from most developers who get Governement subsidies. When the developments are successful, they make alot of money. When they are not, they get further subsidies, or just go bankrupt on the one project, while keeping all the profitable ones.
The profits are for CIM, the losses for the taxpayers.
They pay insiders to ply the halls of whatever City they are developing in, to help them grease the way.
Its not a good system, but its not illegal and CIM plays the game better than others.
Actually some of CIM’s tactics are most probably illegal. In obtaining the ENA for the north side of CRA’s Hollywood-Western, CIM and CRA knowingly made misrepresentations to the City Council. Fraud, however, is part and parcel how L.A. does does business.
Look at CRA’s Hollywood-Highland. It cost $625 Million to construct, but was then sold to CIM for $201 Million and then the City gave CIM an additional $30 M to rehab the new Kodak Theater. That’s a net difference of $454 Million — almost $1/2 Billion — on one project to CIM’s benefit.
Was that Swiller or O’Swindler?