Alleged lender on HFZ’s 1133 Lex site claims Feldman in default on $18M in loans
By Adam Pincus
UPDATED: An anonymous lender using the name YH Lex Estates LLC filed a suit in New York State Supreme Court yesterday that claims HFZ Capital Group, Ziel Feldman and principal Nir Meir owe more than $18 million in defaulted loans tied to a planned condo project at 1133 Lexington Avenue. The suit is seeking summary judgment in the amount of $18.05 million.
The personal identify of the lender was not disclosed in the filing. The special purpose company that allegedly made the loans is registered at the address of the law firm Solomon Blum Heymann. There are at least four other companies with similar names registered at the law firm address, including YH 2nd Ave Estates LLC and YH FK Estates LLC.
YH Lex Estates LLC claims it made $20.05 million in loans to HFZ, Feldman and Meir between May 2017 and May 2019. The loans do not appear in public records.
A spokesperson for HFZ Capital Group said in a statement that, “the claim is baseless and it is in the process of being dismissed.”
HFZ and Feldman have been under considerable financial pressure this year. In September, CIM Group sought to force a uniform commercial code (UCC) foreclosure sale of $89 million in mezzanine loans secured by an interest in four HFZ projects, according to the Commercial Observer. However the article said a source told the Observer that the sale scheduled for November 12 would not go ahead.
In addition, PincusCo reported last month that a Chicago investment firm sued Feldman seeking repayment of loans tied to an industrial portfolio. That suit was settled the following day.
HFZ began assembling the properties at the 1133 Lexington Avenue site, which total five parcels and cost just over $60 million to purchase, in at least three transactions. HFZ took out a loan in February this year totaling $43.6 million secured by the five parcels, from lender W Financial REIT.
The suit claims that “between May 15, 2017 and May 3, 2019, at defendants’ requests, YH loaned HFZ the sum of $20,050,000. Defendants sought these funds in connection with a real estate project HFZ intended to develop on the Upper East Side of Manhattan.”
UPDATED with comment from HFZ Capital.