[Investblogger]

Annie Leibovitz May Lose Debt-Saddled Property

By Katya Kazakina
Bloomberg
August 13, 2009



The former owners of two 19th-century homes in Manhattan's Greenwich Village said they regret selling them in 2002 to photographer Annie Leibovitz, who is in danger of losing the properties in a $24 million lawsuit.
"Big mistake," said Jay Furman, who was part of a small investment group, FYH Village LLC, that owned adjoining three-story houses built in the 1830s. "It was a gorgeous building. It had original floors. The fireplaces were spectacular."

Leibovitz embarked on extensive renovations of the buildings at 755-757 Greenwich St., which she planned to combine into a single 9,000-square-foot live-and-work space, according to documents filed with the New York City Landmarks Preservation Commission.

The renovations dragged on for years, igniting opposition by the Greenwich Village Society for Historic Preservation and a $15 million lawsuit against Leibovitz by her next-door neighbor. In September 2003, Leibovitz settled the suit by buying the neighbor's building for $1.87 million.

These three properties contributed to the "dire financial condition" that led her to seek a $24 million loan from Art Capital Group, which lends money using art as collateral, according to a lawsuit filed July 29 in New York State Supreme Court in Manhattan.

Leibovitz backed the loan with rights to her photographs, the Manhattan properties and a house in Rhinebeck, a leafy enclave about two hours north of New York, according to the suit. Art Capital, based in New York, is suing the photographer for breaching a contract that allows the company to sell the properties and photographs' copyrights even before she is due to repay the loan on Sept. 8, according to court papers.

FYH Village bought the two properties in January 2001 for $3.3 million, according to records filed with New York City's Finance Department. In April 2002, the company sold them to Leibovitz for $4.15 million, Charles Yassky, another partner, said in a telephone interview.

"It was such an unusual and charming property," Yassky said. "And being a developer in New York, you don't often come across something like that."

Leibovitz, 59, is the creator of famous photographs, including a nude of John Lennon in a fetal position with Yoko Ono, and a portrait of a pregnant, naked Demi Moore published on the cover of Vanity Fair.

Renovations to the West Village buildings went awry. In October 2002, cellar excavations, done without a work permit, undermined a shared wall with a neighboring house, according to a violation issued by the city's Department of Buildings. A chimney collapsed, filling the building with gas and forcing its owners to evacuate, said Andrew Berman, executive director of Greenwich Village Society for Historic Preservation.

During the next year, the group complained about deterioration of the three structures, which were left exposed to the snow and rain, Berman said. On the first anniversary of the renovations, group members and local residents picketed outside the properties, with signs that read "Hit & Run Annie."

The $6 million Leibovitz spent overall for the three red-brick, vine-covered houses, located across the street from a popular gastro-pub, the Spotted Pig, was only the start of her mounting costs.

Exterior and interior work included a new roof, raising and propping up walls, fixing the facade, installing new doors and windows and making alterations to the garden, according to permits filed with the Department of Buildings and the landmarks commission.

While the commission has to approve the exterior changes to historic buildings, owners typically have a free hand with the interiors.

High-end interior renovations in New York can easily run into millions of dollars, with prices ranging from $450 to $1,200 per square foot, designers and contractors said.

In June 2008, Leibovitz approached Art Capital Group in a "dire financial condition" arising from tax liens, mortgages and unpaid bills, the company said in its complaint.

Three months later, the company's affiliate, American Photography, gave Leibovitz a $5 million mortgage, according to the filings with the finance department. The mortgage was part of the $22 million credit line Art Capital extended to her, according to court filings.

In December 2008, she asked Art Capital for another $2 million and a lower interest rate, the court documents show. The same month, Leibovitz consolidated various loans into an aggregate $15.6 million mortgage from American Photography, according to the city's finance department. That mortgage is part of the $24 million loan.

In return, Leibovitz signed an agreement making the firm an "irrevocable, exclusive agent" for the sale of her works and property for the loan's length and for two years after she pays it off, according to the complaint.

http://www.washingtonpost.com/wp-dyn...081203002.html