About Real Estate

The Hotel Taft went into receivership last week, bringing an end to a bizarre realestate venture by a novice In the hotel field, Gilbert M. Federbush.

By his own account a year ago, Mr. Federbush had never ‘successfully managed a hotel property. Nevertheless, he came into ownership of the 1,432‐room Taft, one of the largest and best known of all midtown tourist hotels.

For years the Taft had been owned and run by the Lawrence A. Wien real estate organization. But with costs up and hotel occupancy in general sagging, it had been losing money steadily.

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In real estate, such a situation lends itself to a no‐cash sale, or transfer of ownership. The buyer gets the deed and takes formal responsibility, through a corporate entity, for running the property, and the seller takes back a mortgage covering his own earlier investment and hopes for the best. Meanwhile, there are probably one or more other mortgagees “looking to the property” for security of their loans.

In the worst of circumstances, the buyer may merely collect the rental income, pay as few of the bills as possible and await an inevitable foreclosure action, perhaps by the city because of unpaid real‐estate taxes or by a mortgagee disturbed by a delinquency on the loan.

In residential property, the term “milking the building” is often applied to this procedure, because repair and maintenance declines, and the buyer finally “disappears,” leaving angry creditors. But the term is a subjective appraisal of intent. Even hard work and good intentions can fail when underlying conditions are unsound, and speculative buyers are sometimes a property's best and only hope.

There is neither a way nor a need to judge the speculative intentions of the Taft purchasers, but a year ago they said their hope was to build occupancy to a profitable level. In the city, luxury hotels such as the Pierre, the Park Lane and the Regency have been doing quite well this year, hotel men report. The same is true of such leading convention hotels as the New York Hilton and the Americana.

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But moderate‐priced older hotels have struggled for years. Lately, airline package tours and Bicentennial promotions are said to be helping them. Typically, transient rates run from $15 to $25 a night. Some major hotels of this class—the New Yorker, the Royal Manhattan—have closed.

At the Taft, a Federbush associate said last week that occupancy year‐round was running at a rate of 51 percent, about what it was when Mr. Federbush's Urban Renewal Housing and Development Corporation acquired title a year ago from the Wien interests. The hotel was rerorted to be losing about $80,000 a month at the time.

Title was transferred almost immediately to an entity called the Hotaft Corporation, in which a lawyer associated with Mr. Federbush, S. Robert Lee, was active. Last week he was reported to have withdrawn from participation in the Taft venture months ago.

Over time, unpaid real‐estate taxes have risen to more than a million dollars, according to agents of the court ‐ appointed receiver. And the arrearage on the $7.4‐million first mortgage held by the Penn Mutual Life Insurance Company, which undertook the foreclosure Action, has mounted to $300,000, a spokesman said.

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But regular maintenance has been performed, said Kenneth M. Miller, a Penn Mutual mortgage officer. He also said that the company wanted now to improve the “image” of the hotel and that he assumed that money would be spent on physical improvements to achieve this.

In an ironic twist, Penn Mutual's real‐estate consultants, Rudnick, Brett, Wyckoff Inc., have hired the hotel specialist, Bertram Fields, to assist them in managing the Taft.

It was Mr. Fields who acted as court‐appointed receiver in a foreclosure action against Mr, Federbush's Urban Renewal Housing and Development Corporation at another midtown hotel, the Woodstock, on West 43d Street. The Fields family had held the second mortgage on that property, and undertook the foreclosure action not long after another nocash purchase by Mr. Federbush.

A foreclosure sale of the Woodstock is due next week. The expected purchaser will be the Fields group itself. After the sale, two nonprofit housing organizations, Project Find and Rousing Conservation Coordinators, are expected to acquire a 10‐year lease, with two 10‐year renewal options, to run the hotel.

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At the Woodstock as at the Taft, real‐estate tax and mortgage payments stopped soon after Mr. Federbush came into ownership. In an interview at the time he acknowledged, “if we had continued paying the mortgage, we could not make repairs.”

His purchases of financially ailing hotel properties have not stopped with the Wood‐ stock and the Taft. Last year he also acquired title to the posh Carriage House on the Ocean in Miami Beach.

The Carriage House, only five years old, has 423 units, two swimming pools, cabanas, tennis courts and 300 feet of ocean frontage. It passed through several hands, each trading back a mortgage, and finally into those of a Miami real‐estate operator named Marvin Glick, who then sold it to Mr. Federbush.