$10M bankruptcy filed to block foreclosure of 11-unit East Harlem rental

The developers of an 11-unit rental building dubbed the Apollo at 231 East 123rd Street in East Harlem, Manhattan, placed the property in bankruptcy protection yesterday, a day before the property that has a judgment totaling $10.7 million was set to sell at auction, but the asset was not valued at more than $10 million.

The property owners, Alex Halimi and Saul Mazor, filed the action in U.S. Bankruptcy Court in Manhattan, claiming both assets and liabilities between $1 million and $10 million. 231 E 123 LLC ch. 11 pdf

A Manhattan State Supreme Court referee scheduled an auction for March 20, 2024. The notice of sale was published on February 22, 2024.

This is the second bankruptcy for the property. The first was filed in Philadelphia, under case number: 2:21-bk-11469, but that was dismissed January 11, 2022.

The lender is an affiliate of the Evanston, Illinois-based hedge fund, Mangetar Capital, through its servicer Sharestates Investments. The borrowers are Alex Halimi and Saul Mazor. Halimi and Mazor bought the property, a former three-family, for $1.4 million, and then in July 2015 filed plans for an 11-unit building, borrowing $4.88 million in 2016 and another $1.2 million in 2019. The building has been subject to a large number of violations, and the city’s Department of Buildings does not reflect a certificate of occupancy for the structure.

Alex Halimi of 231 E 123 LLC submitted a new building construction project for an 11-unit, 8,563 square-foot residential (R-2) building on July 27, 2015 under job number 121193617 and permitted December 21, 2017. It called for the construction of a six-story building.

In March 2022, Magnetar’s entity filed the pre-foreclosure action.

Bankruptcy 24-10445-lgb LINK

Foreclosure 850052/2022 LINK

According to the 2022 foreclosure complaint, “That there is now justly due to plaintiff upon said note and mortgage, the combined principal sum of $6,078,000 with interest thereon at the default rate of 23.99 % per annum, plus interest rate and default interest rate adjustments thereafter, from 8/01/20 plus any sums advanced by the plaintiff.”

On May 19, 2023, Magnetar was awarded summary judgment, and then Halimi and Mazor the next month filed an appeal to the Appellate Division, First Department, but that appeal appears to have been abandoned. The Notice of Sale was filed on February 22, 2024.

The elevator building with 11 residential units in East Harlem has 11,576 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 25 feet and is 100 feet deep with a total lot size of 2,522 square feet. The zoning is R7B which allows for up to 3 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $2.2 million.

The block

On this tax block, PincusCo has identified the owners of 14 of the 29 commercial properties representing 148,261 square feet of the 254,163 square feet. The largest owner is City of New York, followed by Coalition For The Homeless and then East Harlem Council For Human Services. On the tax block, there was one new building construction project filed totaling 8,563 square feet. It is a 11-unit, 8,563 square-foot residential (R-2) building submitted by Alex Halimi with plans filed July 27, 2015 and permitted December 21, 2017.

The surrounding

Within a 400-foot radius of 231 East 123 Street, PincusCo identified two commercial real estate items of interests occurred over the past 24 months. Of those two items, two were loans above $5 million totaling $95.6 million. The most recent of the two was Certes Partners in which borrowed $68.5 million from MF1 Capital secured by the 0-square-foot, 138-unit rental (D7) on 212 East 125th Street on September 21, 2023.

Direct link to the property’s ACRIS page and link to DOB NOW portal.