Two under-the-radar Brooklyn real estate developers are
confronting more than $51 million in
personal guaranty and foreclosure lawsuits on five separate loans doled out in
Williamsburg and Greenpoint in 2006 and 2007.
In the largest and most recent legal action, special
servicer CWCapital Asset Management sued the
developers, Menachem Stark and Israel Perlmutter, to recover $29 million
lent in 2007 and secured by the seven-story, 74-unit rental building at 100 South
4th Street, between Berry Street and Bedford Avenue.
In the CWCapital suit filed in U.S. District Court in
Brooklyn June 28, the special servicer claims the
pair personally owes the full $29 million because of a Chapter 11 filing the pair
entered in an effort to block a foreclosure proceeding in 2009.
Perlmutter (who also goes by the name Sam Perl) and Stark,
claim in 2009 court papers that they
manage 26 properties and have constructed no fewer than 12 buildings.
But the CWCapital action is far from the only one that
lenders have filed against the two men.
Chicago-based MB Financial Bank holds more than $19.4 million in loans given to the
two men as well as to their sometime-partner Eugene Meyerowitz. And this
week, the bank came to market with one of the notes,
which has a face
value of $9.2 million.
The legal jockeying and note offerings are part of an
accelerating market for loan sales with banks such
as Brooklyn Federal Savings Bank and Capital One unloading nonperforming loans.
Perlmutter and Stark, who paid the Muschel family $9 million
for 100 South 4th Street in 2006,
borrowed the $29 million in April 2007. They
defaulted on the loan and the lender filed to foreclose in 2009. That action is
still pending.
$9M note for sale in active region of Williamsburg
MB Financial is selling the first of at least three loans it
acquired when it took over the failed
Chicago-based Broadway Bank, the original lender. The $9.2 million note being
offered for sale was given to Perlmutter, Mendlovitz and Stark in 2007 and was
secured by three parcels located along North 9th Street near bedford Avenue in
Williamsburg where they failed to build residential projects.
The parcel, at 212-218 North 9th Street between Roebling
Street and Driggs Avenue, has 44,500
square feet of development rights; the parcel at 237-243 North 9th Street,
between Roebling and Withers streets, has 52,551 square feet; and the parcel
at 261-263 North 9th Street — also between Roebling and Withers streets but
not adjacent to the other site — has 33,450 square feet of development rights.
All those figures are according to PropertyShark.com.
The parcels between Roebling and Withers streets are
adjacent to and part of the same city
block as the property 250 North 10th Street, which developer LCOR in March bought
for $15 million.
While MB Financial is selling the $9.2 million note, the
bank would not comment as to whether it
would sell the other two notes, one for $6.2 million on 120 South 4th Street in
Williamsburg, next door to 100 South 4th Street, or for $4 million at 239 Banker Street in
Greenpoint.
David Schechtman, a senior director at investment sales firm
Eastern Consolidated, which
is handing the sale for the bank, also declined to comment.
The owners could not
be reached for comment or did not respond to requests for comment, and their
attorneys did not return calls for comment.
All three loans are in default and are approximately two
years into foreclosure proceedings in
Brooklyn state court, court records show.
In addition, a mezzanine lender, 77 Charters, claims in
court papers filed April 2010 in U.S. District
Court in Brooklyn that it is owed $2.5 million, secured by the North 9th Street
properties. That action is also ongoing.
MB Financial holds two other notes where the developers
planned residential projects. At 120
South 4th Street on the corner of Bedford Avenue, they have partially built
a 26,902-square-foot building with 18 units, yet it remains uncompleted. MB
Financial holds a $6.2 million note on the property.
The third loan is at 239 Banker Street, where MB Financial
lent the trio $4 million in 2006.
The
developers planned to redevelop a 68,200-square-foot loft building at that location. The
city’s Department of Buildings issued a full vacate order for illegal tenants
living there in 2009, city records show.
In January of this year the DOB approved plans first filed in
2006 to convert the four-story brick
building from manufacturing to a hotel.
Note sales are picking up in the city, an investor in the
Manhattan and Brooklyn
market said.
“We are definitely seeing an uptick in note deals,” said
David Goldban, general counsel at Pink Stone
Capital. “A lot of the deals we are seeing are smaller deals that have been
hanging around. The good deals are going very quickly.”
Pink Stone Capital bought the $50 million note on 111
Washington Street in April, and on July 1 won control of the property, Goldban told The Real
Deal.
He declined to discuss financial aspects of the deal and city records have
not yet been published. Pink Stone intends to develop high-end luxury
rentals and some retail at the site, he said.
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