Buyer files bankruptcy to preserve $92.5M purchase from Fairstead in Harlem

A contract vendee controlled by bankruptcy expert and real estate investor David Goldwasser filed for bankruptcy yesterday in Brooklyn to protect a $92.5 million contract with seller Fairstead to buy an historic 538-unit complex of walkup apartments that covers an entire city block in Harlem. The rental apartments have multiple addresses including 2802 Frederick Douglass Boulevard, and are bounded by Frederick Douglass Boulevard, 150th Street, Adam Clayton Powell Jr. Boulevard and 149th Street. The complex is an individual city landmark.

According to the petition filed in U.S. Bankruptcy Court in the Eastern District of New York, the entity Dunbar Partners BSD LLC as the buyer has a contract set to close today, February 22, 2023, to buy the complex for $92.5 million. The buyer has already made a $3 million down payment, according to the filing, but for reasons not stated Fairstead allegedly has stated the contract is in default. Fairstead bought the complex in 2013 for $55 million.

Goldwasser placed the entity in bankruptcy because, he states, he believes with a 60-day respite, he can close the sale and pay all the creditors.

Financing has been more difficult in the currently higher-interest environment, according to insiders.

Court filings represent the position of one party and are not necessarily accurate or complete.

Another contract vendee resorted to bankruptcy to maintain control of a contract. In that case the plaintiff was Pearl Schwartz, and the bankruptcy action succeeded, and the property was flipped to another buyer, the Allure Group, with a $160 million price tag.

According to the filing, the prior contract entity sole member before Goldwasser was Shaya Labin. Benjamin Neuman has an unsecured claim of $3 million, which is the amount of the deposit.

David Goldwasser as petitioner in the affidavit claims that with a 60-day breathing period, he will be able to close on the purchase.

According to the filing, “I am the sole member of Preston Court Shares, LLC, the sole member of Dunbar Partners BSD LLC (“Debtor”)”. The Seller has asserted that the Debtor is in default under the Contract, an assertion that the Debtor disputes, and demanded a closing on the Contract proceed on February 22, 2023.”

The property has been the subject of dozens of landlord and tenant disputes. The city’s Department of Housing Preservation and Development sued Fairsted in November 2022 over an alleged lack of hot water. LT-318579-22/NY

According to PincusCo data, the walkup buildings with 538 residential units in Harlem have 436,115 square feet of built space and 81,173 square feet of additional air rights for a total buildable of 517,107 square feet according to a PincusCo analysis of city data. The property is owned by Fairstead. The parcel has six buildings with frontage of 775 feet and is 199 feet deep with a total lot size of 150,322 square feet. The lot is irregular. The zoning is R7-2 which allows for up to 3.44 times floor area ratio (FAR) for residential. The property has a J-51 exemption that started in 2002 and expires in 2036. The city-designated market value for the property in 2022 is $27.2 million. The most recent loan totaled $86 million and was provided by Berkshire Residential Investments on February 23, 2021.

Correction: An earlier version of this post misspelled the Shaya Labin’s last name as Laben, because it was misspelled as Leben on the bankruptcy filing.

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