Lender Valley National Bank filed a $10.8 million pre-foreclosure action against the owner of the vacant development site 1633 East 16th Street in Sheepshead Bay, Brooklyn. The property is owned by an entity controlled by Arch Companies, which itself is undergoing turmoil as partners battle in court for control of the company.
The development entities Kings Hwy Development 2 LLC, Kings Hwy Development 3 LLC, and Kings Hwy Development 4 LLC, borrowed $10.8 million from Valley National Bank in August 2022.
At the same time,,the Babaev family’s AB Capstone sold an interest to Arch Companies entities. It was not immediately unclear who currently controls the site. The complaint identifies AB Capstone principals by name, even though it was Arch Companies Jeffrey Simpson who signed the loan
The parcel has frontage of 292 feet and is 108 feet deep with a total lot size of 23,185 square feet. The lot is irregular. The zoning is R5B which allows for up to 1.35 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $1.3 million. The most recent loan totaled $10.8 million and was provided by Valley National Bank on August 26, 2022.
According to the complaint, “This is a commercial foreclosure action to foreclose two Mortgages (hereafter defined) encumbering the Premises, to secure payment of two Notes (hereafter defined) in the aggregate principal amount of $10,800,000.00 held by VNB (the “Loans,” each a “Loan”)… Borrowers failed, upon the Maturity Date, August 26, 2023, to pay all outstanding amounts due under the Loan Documents, and specifically, under the Notes (the “Default”).”