Capstone sues Nightingale CEO over $90M in alleged guarantys at Whale Building
14 53rd Street Whale Building (Credit - Google)
Capstone Equities, as lender, alleges that Nightingale Properties CEO Elchonon Schwartz is bound by guarantys including recourse, carry, completion, payment and environmental, and through them owes more than $90 million because the loan with an original principal of $88.9 million is, the complaint says, in maturity default.
Court filings represent the position of one party and are not necessarily accurate or complete. Case LINK
Even as Capstone filed this suit yesterday, it is pursuing a UCC foreclosure auction set for August, as The Real Deal reported last month.
Nightingale Properties bought the Whale Building at 14 53rd Street in Sunset Park, Brooklyn, on September 25, 2020, for $84.1 million, with the seller Madison Realty Capital retaining a 25 percent stake, according to news reports from the time.
To finance the purchase, Nightingale Properties obtained an $88.9 million loan from TPG. TPG sold the loan to Capstone Equities on May 17, 2023.
The office building in Sunset Park has 382,080 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 621 feet and is 181 feet deep with a total lot size of 112,665 square feet. The zoning is M3-1 which allows for up to 2 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $41.4 million.
Nightingale brought two cases related to the building, one against TPG and another against Capstone, and both were dismissed. The judge dismissed the suit against TPG entirely, and against Capstone against all causes except a claim Nightingale brought against Capstone for “unfair competition,” which survives.
According to Capstone’s new complaint, “Although prior defaults existed, pursuant to the terms of the Senior Loan Note, the Senior Loan Mortgage, and the Senior Loan Agreement, all sums due and owing under the Senior Loan Note became immediately due and payable on April 9, 2023.”
Direct link to the property’s ACRIS page and link to DOB NOW portal.