Dawnay day

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Tenants Struggle as a British Landlord Goes Bust

Joaquin Rufiles and Josefina Toiralua with their daughter, Stephanie Rufiles, 18 months, in their East Harlem building.

Foreign investors were a major force in New York’s real estate boom of the last decade, with families and companies from Dubai to Australia swallowing weekend apartments and Midtown office towers. In 2007, the roster of international investors came to include a British firm, Dawnay Day, whose executives had a splashy reputation for spending millions on fine art and yachts.

It was then, after a meeting with a New York landlord at an art show in Miami, that the British firm plunked down $225 million for 47 rental buildings, most of them in East Harlem.

The plan, in a gentrifying neighborhood, was to repeat the success its executives once found in the transformation of the south London neighborhood of Brixton. Dawnay Day would ease out its mainly lower-income residents, rehabilitate the apartments and charge a new generation of younger, more affluent tenants substantially steeper rents.

The efforts, though, didn’t get far before the recession spread across the globe and Dawnay Day went bust. Now, as part of one of the United Kingdom’s largest real estate insolvencies of the recession, the firm’s yachts are up for auction, and their expensive art has been stripped from the walls of its former London headquarters.

And in the 47 buildings, anger, uncertainty and a degree of misery have set in. At tenant meetings, renters complain of gaping holes in their ceilings and walls that allow rats to freely roam. The properties face foreclosure, and it is very possible that the buildings may fall back into the hands of the landlord some tenants say neglected them long before they attracted a foreign buyer.

“They were a multinational corporation guided by greed,” Juan Haro, director of the housing rights group Movement for Justice in El Barrio, who has worked with tenants in the buildings, said of Dawnay Day. “They failed miserably. They crumbled financially and they were a victim of their own devices.”

Saying the federal government has not adequately responded to the broader real estate crisis, a group of tenants are planning a demonstration for Tuesday at the Bank of New York Mellon, which holds the mortgage on the Dawnay Day properties.

For the moment, the thousands of residents of the 1,100 apartments in East Harlem have been left partly to fend for themselves. Many of them have lived in the buildings for generations, and they are hardly unfamiliar with hardship and discord. Still, their current state of limbo — days trying to get apartments repaired and night meetings with a court-appointed receiver — has taken its toll.

For Joaquin Rufiles, a barrel-chested butcher who shares a one-bedroom apartment in one of the East Harlem buildings with his wife, Josefina Toiralua, their two children and his wife’s uncle, Dawnay Day’s collapse means living with rats in their kitchen. On Nov. 4, his family presented their complaints to the receiver handling the bankruptcy. They said the problems were not fixed.

“We pay rent. It’s not like we live for free,” said Ms. Toiralua through a translator.

The tale of this portfolio of Harlem buildings began in the 1980s, when Steven Kessner, the son of a Bronx taxi driver who studied economics at Dartmouth based on the encouragement of one of his father’s passengers, passed up Harvard Business School to return to the city and work in real estate. Mr. Kessner said he started buying and repairing East Harlem walk-ups when most banks would not lend in the neighborhood.

In what he described as 100-hour workweeks that required “blood, sweat and tears,” he repaired boilers, eliminated thousands of violations and kicked out drug dealers running the buildings. At the same time, he expanded his empire by buying properties in the East Village.

While Mr. Kessner said that he worked hard to manage the buildings, and repaired many of their problems, The Village Voice identified him as one of the 10 worst landlords in New York City in 2006. By the time Mr. Kessner sold the buildings in March 2007, the 1,111 apartments still had 2,419 violations, according to the Department of Housing Preservation and Development.

Mr. Kessner decided to sell the bulk of his portfolio in the fall of 2006. The real estate market in New York was peaking. All corners of Harlem were being transformed — integrated and gentrified and alive with new commercial investments and enterprises.

A world away, the real estate firm Dawnay Day had become something of an insatiable Goliath, buying up mainly commercial real estate in a half-dozen countries. Its purchases included well-known trophies like the Michelin-starred London restaurant the Wolseley and a hotel in the Cotswolds where Oliver Cromwell once stayed. British newspapers varied widely on their estimates of the company’s value, though they roughly put it at several billion dollars.

With company money, Dawnay Day executives also indulged their personal hobbies. Yachts were bought to entertain friends and relatives. Local British papers say they decorated their office with multimillion-dollar works of art including a Damien Hirst, and a Lucian Freud called “Benefits Supervisor Sleeping,” which was auctioned by Christies in May 2008 for $34 million.

They then set their sights on what for them was an unconventional purchase, the buildings in East Harlem.

The deal, which had been discussed for weeks, was completed during Art Basel, an annual art collectors’ gathering where Dawnay executives agreed to meet Mr. Kessner. Mr. Kessner recalls chatting with the company’s two head executives, Peter Klimt and Guy Naggar, about the final price and letting his son Michael stay and manage the buildings.

By March 2007, when Dawnay Day closed on the purchase, executives trumpeted the deal to British papers, saying that they could easily raise rents more than tenfold and then expand through the United States.

The tenants, if unfamiliar with their new international landlord, learned quickly what the change would mean for them. Mr. Haro said that Dawnay Day quickly began pressuring longtime tenants to move out, asked all tenants for Social Security numbers and began charging for basic repairs. Diego Quiñones, an organizer with Community Voices Heard who also is working with Dawnay Day tenants, said the landlords quickly grew “more strategic” in how they harassed tenants and tried to push them out. In October 2007, some tenants filed a lawsuit under consumer protection laws to challenge fees imposed over late rent, repairs and washing machines.

Meanwhile, Andre and Matthew Mauro, who run a local real estate brokerage, said they started receiving three to four calls a week from renters in the Dawnay buildings eager to leave. Gabriella Pollonini left her $1,200-a-month one-bedroom when her lease expired in May 2009 after management did not respond to her complaints about three outbreaks of bedbugs and the lack of heat and hot water, she said.

“I had four blankets, and I was sleeping with my pajamas and my jacket,” said Ms. Pollonini, 39, a researcher at the nearby Mount Sinai School of Medicine. “I was going to the gym to get my shower.”

However troubled the conditions in the Harlem buildings, the problems with the firm were apparently dire. According to British press reports and interviews with British executives familiar with the company’s unraveling, Dawnay Day found itself overexposed as the credit markets started to tighten in early 2008. By the summer, Dawnay Day’s loans and debts were being called in, and the company fell into receivership. Assets were quickly sold.

Richard Stanley, a London-based former director of the real estate firm DTZ, which handled the sale of many of Dawnay Day’s European properties, said the magnitude of Dawnay Day’s fall made it one of the largest real estate insolvencies in 2008.

Peter Bennett, director of the Swiss-based Blue Water Yachting, which has been trying to sell one of Dawnay Day’s yachts for $6 million, said its executives were too optimistic. He had met some of them when they were chartering their yacht.

“They just thought the boom was going to keep going,” he said.

Dawnay Day’s three top former executives, who are no longer associated with the Harlem buildings, did not respond to requests for interviews through New York and London real estate brokers who have worked with them in the past. Mr. Klimt, who is one of the two former heads of Dawnay Day, did not respond to phone and e-mail messages at his new London company, Klimt & Co.

Back in Harlem, where Dawnay Day had hired Michael Kessner to manage the buildings for them, there was general confusion. Mr. Kessner said he stopped receiving guidance from Dawnay Day after the company folded and had little direction to go by.

“Their office basically just shut down,” he said.

In September, the properties officially fell into foreclosure. That month, Justice Charles E. Ramos of State Supreme Court in Manhattan appointed Harvey Fishbein as receiver to manage the properties through foreclosure. At this point, Mr. Fishbein has not been given any time frame for when the properties may be sold.

And so the tenants spend their days meeting with the receiver, celebrating minor victories — their lawsuit over Dawnay Day to remove fees from their rent bills — and fearing the future.

Mr. Kessner said he would bid on the foreclosed properties “at the right price.”

The city said it is monitoring conditions in the buildings. So far, officials said, the financial distress has not translated into wholesale physical distress.

Meanwhile, tenants still carry some share of envy toward their London landlords. They talk sometimes about how they would have used the fortunes that Dawnay Day executives spent on yachts and art collections. As Mr. Rufiles cuddles his 4-year-old daughter and rats squeak faintly from his kitchen cabinet, he marvels at the habits of the rich.

“What I would do with money is buy clothes for my children,” he said.

Sours: https://www.nytimes.com/2009/12/22/nyregion/22dawnay.html

Dawnay Day

TypePrivate
IndustryOther credit granting Edit this on Wikidata
Founded1928; 93 years ago (1928)
Founders
DefunctJuly 2008 (2008-07)
Headquarters

Dawnay Day is a privately owned financial services group. Founded in 1928, the London-based group, employs more than 1,000 employees and claims to own gross assets of more than $4-billion. It has offices in Europe, the Middle East, India, the US, and Australia.[1]

History[edit]

Dawnay Day can trace its history to 1928, when it was founded by Major Julian Day and General Guy Dawnay.[2]

French financier Guy Naggar bought Dawnay Day in 1981.[3] Dawnay Day went insolvent in July 2008.[4][5]

Investments[edit]

Dawnay Day bought German department store chain Hertie from Karstadt-Quelle (later Arcandor) in partnership with Hilco in 2005.[1]. Dawnay Day held an 85% stake in Hertie, Hilco held 15%. Hertie filed for bankruptcy on May 20, 2009 since Dawnay Day could not support it any further due to its own dire financial situation. The liquidator of Hertie claimed the department store chain got into difficulties due to improperly high rent payments to the real estate owners, however as seen in the case of Arcandor's bankruptcy in June 2009, the whole German department store sector experienced severe difficulties during these times.

Opposition[edit]

Dawnay Day has been criticized and opposed for its purchase of 47 apartment buildings in East Harlem where it has attempted to gentrify the area and make rents unaffordable to current low-income residents. The gentrification of the area and removal of current renters has been opposed by the tenants based Movement for Justice in el Barrio.[6][7][8]

References[edit]

  1. ^Treanor, Jill (July 11, 2008). "F&C shares plummet as Dawnay Day sells". The Guardian. Retrieved February 26, 2009.
  2. ^Davey, Jenny (December 10, 2005). "Dawnay, Day's bullish refusal to follow the herd". The Times. Retrieved March 3, 2009.
  3. ^Clark, Nick (15 July 2008). "Dawnay, Day faces asset sell-off at fraction of value". The Independent.
  4. ^Duncan, Hugo (24 July 2008). "Dawnay, Day directors quit". London Evening Standard.
  5. ^Bowers, Simon (2011-04-10). "Dawnay Day tycoon faces lawsuit over F&C bets". The Guardian. ISSN 0261-3077. Retrieved 2020-10-02.
  6. ^"Best power-to-the-people movement - 2006". VillageVoice.
  7. ^"Victory in El Barrio: East Harlem Tenants Win One As British 'Predatory Equity' Landlord Collapses". New York Indypendant.
  8. ^"El Barrio Tenants Win Against Landlord". Movement vs Dawn Day.
Sours: https://en.wikipedia.org/wiki/Dawnay_Day
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Dawnay Day tycoon Guy Naggar faces lawsuit over F&C bets

A legal spat has broken out between the veteran stockbroker and Labour party donor Barry Townsley and Guy Naggar, the fallen property and investment tycoon whose sprawling £2bn Dawnay Day empire collapsed dramatically in the summer of 2008.

The row between the former friends and business partners centres on losses from huge bets on the share price of F&C Asset Management, entered into by companies linked to Naggar. This disastrous investment sparked the downfall of Dawnay Day and caused turmoil for the FTSE 250 fund management group, wiping almost 30% off its share value in a day.

Many of these ill-fated wagers on F&C were provided by a Townsley-run brokerage in which Dawnay Day held a majority stake and whose management, led by Townsley, owned the balance of shares.

The lawsuit accuses Naggar of acting as a shadow, or de facto director, at the brokerage, exerting control over the management of day-to-day business and using the company to pursue an F&C investment strategy for his own ends without appropriate regard to the risks.

On one occasion, the claim suggests, Naggar acted to shift part of the F&C bet from one company that had assets, and so could absorb potential losses, to another that was allegedly insolvent. This, Townsley argues, was against the best interest of his brokerage, which would ultimately be looking to collect those losses.

Naggar declined to comment on specific allegations, but said: "This claim is misconceived, ill-founded and is being strenuously defended."

His ambitious investment strategy for F&C, known as "Project Imperial", came to an abrupt end on 10 June 2008 when Dawnay Day companies defaulted on the F&C bet – technically made through derivative instruments known as contracts for difference, or CFDs – at a loss estimated to be about £70m.

The event shocked the markets as brokerage firms that had provided bets to Naggar immediately rushed to sell shares in F&C, which they had accumulated in order to be able to offer the CFDs in the first place. A stake representing about 20% of F&C was hurriedly sold at the distressed price of 100p a share.

The move – coming only seven days after Naggar had raised his interest in F&C – caused panic among investors and wiped 28% off the fund manager's share price in one trading session.

On the same day, Townsley agreed to buy Naggar's controlling stake in the brokerage business, changing its name from Dawnay Day Capital Markets to Hobart Capital Markets. Days later he personally lent Hobart £5m in order to ensure it had sufficient capital to satisfy regulators.

The latest accounts for Hobart state: "A provision of £6m was made in respect of CFD debtors that were due from Dawnay Day groups of companies for CFD margin defaults during the period. Hobart has had no defaults for CFD margins from any [other] clients... The business does not expect to recover these bad debts."

Nevertheless, the brokerage recently filed a claim with the high court for £4.7m plus interest against Naggar personally.

Connoisseurs in the City

Guy Naggar, a suave 70-year-old merchant banker and art collector, born in France but holding Italian nationality, became one of the earliest high-profile victims of the credit crunch, together with his business partner Peter Klimt, when their complex web of interconnected Dawnay Day operations, with assets estimated to be worth up to £2bn, imploded.

At its peak the sprawling empire, encompassing more than 80 companies trading under the Dawnay Day name, was overseen by Klimt and Naggar from offices near Buckingham Palace adorned with contemporary artworks by Lucian Freud, Damien Hirst and Tracey Emin.

Investments ranged from boutique hotels and the Wolseley, a Michelin-starred restaurant, to the fashion retailer Austin Reed and financial operations offering services as diverse as Islamic banking and commodity brokering. Naggar's biggest gamble, however, was Dawnay Day's bets on F&C Asset Management.

Barry Townsley, also a contemporary art enthusiast, became a recognised figure known outside of City circles when he was embroiled in the "cash for honours" row after he agreed to lend funds to Labour and gave a further donation to Tony Blair's city academy programme. He was nominated for a peerage in 2005, but later withdrew, blaming media attention.

Outside of his work at Hobart, Townsley is a director of a number of businesses owned by the entrepreneur Richard Caring, including Caprice Holdings, the company behind a string of London restaurants and the Mayfair nightclub Annabel's. In addition, he is on the board of the Caring-owned company behind Wentworth golf club in Surrey.

Townsley has also been close to the Mayfair investment tycoon Robert Tchenguiz, who was one of his largest customers before he too hit financial difficulties.

In 2003 the stockbroker became embroiled in the messy failure of Langbar International, a purported cash-shell company said to have $275m deposited with a Brazilian bank, which his then company Insinger Townsley helped float on the AIM junior market. It later emerged that the Brazilian certificate of deposit was an elaborate fake, sparking an investigation by the Serious Fraud Office. There is no suggestion that he knew of the forgery.

Sours: https://www.theguardian.com/business/2011/apr/10/dawnay-day-guy-naggar-lawsuit
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