Bankrupt $14M LIC dev site sells, prior owner planned $39M condo

UPDATED: Maninder Sethi and Kavneet Sethi through the entity 25-16 LIC LLC acquired a 39-unit development site valued at $14.1 million at 25-16 37th Avenue in Long Island City, Queens, out of bankruptcy. The prior developer sought to build a 38-unit condominium building with a $39 million sellout. The lender Bankwell Bank provided the new owners a $22 million construction loan.

The seller was 25-16 37 Ave Owners LLC, a company controlled by David Goldwasser’s FIA Capital Partners, which had placed the property in bankruptcy in 2021. The prior developers, including Barry Leon and partners, had begun construction on the 39-unit residential elevator building, but construction stalled and the developers were hit with two pre-foreclosure actions. FIA Capital Partners, which bankruptcy specialist David Goldwasser runs, took control of the company and filed the bankruptcy.

Goldwasser acquired control of the property from a mezzanine lender following a UCC foreclosure auction. At the time of the bankruptcy, the property had assets less than $10 million and debts totaling $18.44 million, composed of a $12.7 million first mortgage, a $3.3 million mezzanine loan, contractors and others, according to the 2021 bankruptcy filing.

The sale transfer closed on February 2, 2023 and was recorded on February 9, 2023.

Greg Corbin, president of Bankruptcy and Restructuring at Rosewood Realty Group brokered the sale, according to bankruptcy court records.

According to an offering memorandum, the building when completed would have an annual gross rental potential of just over $2.7 million and a net operating income of $2.45 million. The project is expected to have 24 free market rentals and 14 rent regulated through the 421a program. The property also has retail on three levels.

A rendering of the project:

Violations and lawsuits

The property was subject to at least two foreclosure actions and a bankruptcy over the past three years. In addition, according to city public data, the properties have received four DOB violations, $6,250 in ECB penalties, and $8,860 in OATH penalties in the last year.

Development

Barry Leon of 25-16 37th Ave Owners Llc submitted a new building construction project for a 39-unit, 42,425 square-foot residential (R-2) building at 25-16 37 Ave in Long Island City, Queens. The plan was filed with the New York City Department of Buildings on September 7, 2012 under job number 420620901. It calls for the construction of a six-story building.
In addition, the most recent condominium plan was filed by 25-16 37 Ave Owners LLC to create 41 residential units and 5 commercial units in a building at 37-02 27 Street in Long Island City, Queens, called Smyth Condominiumthat has a $39 million sellout, according to an February 21, 2017 submission to the New York State Attorney General. The principals of the sponsor, 25-16 37 Ave Owners LLC, were Andrew Fein, Barry Leon, Jesse Leon, and David Shenfeld.

The block

On the tax block of 25-16 37th Avenue, PincusCo has identified the owners of eight of the 13 commercial properties representing 175,507 square feet of the 205,964 square feet. The largest owner is Tamares Group, followed by Barry Leon and then Dimitrios Paliouras.

The majority, or 37 percent of the 172,029 square feet of built space are industrial buildings, with walkup buildings next occupying 30 percent of the space.

Direct link to Acris document. link