Courts roundup: $70M pre-foreclosure in East Flatbush, $32M Turtle Bay rental bankruptcy

$70M pre-foreclosure in East Flatbush: Arch Companies filed to foreclose on debts totaling more than $70 million secured by Hello Living’s 93-unit new building and 111-unit development site at 1580 Nostrand Avenue in East Flatbush, Brooklyn, according to the filing. The recorded debt totaled $71.3 million as of August 2020.

Arch Companies bought the debt in March 2022, and borrowed from Madison Realty Capital to finance that loan purchase. Eli Karp of Hello Living put the property into bankruptcy protection in December 2021 to block a UCC foreclosure auction by the mezzanine lender, Madison Realty Capital, as PincusCo first reported at the time.  The bankruptcy case was dismissed on August 1, 2022.  But not before Jeff Simpson was allegedly impeded in a tour of the property, on May 26, 2022.

With the bankruptcy case lifted, the UCC auction is set for September 21, 2022, run by Greg Corbin of Rosewood Realty Group.

According to the lender, “Borrower and Master Tenant have every incentive to quickly rent out units. The UCC auction of Mezz Borrower’s equity is scheduled for September 21, 2022.”

Court filings are the positions of one party, and are not necessarily accurate or complete.

According to court filings from the lender, “Borrower’s and Master Tenant’s tactics not only contravene specific provisions in the Loan Documents. They are an affirmative detriment to the community, which stands to lose affordable housing to Borrower’s and Master Tenant’s greed. To insure that the Property remains eligible for 421-a tax treatment, and the community gains valuable affordable housing stock, this Court should restrain and enjoin Borrower and Master Tenant and their agents from leasing out apartments or units in the Property pending this foreclosure action.”

According to lender filings, Hello Living signed a 10-year master lease in March 2022 with Joyland Management that requires the master tenant to pay $3.2 million annually. Foreclosure LINK

William Koeppel puts Turtle Bay rental with $32M loan in bankruptcy: William Koeppel filed a petition in U.S. Bankruptcy Court in Manhattan to place the 137-unit rental building at 350 East 52nd Street into Chapter 11 bankruptcy. The building is the subject of numerous court proceedings. The property has a $32.1 million loan originated by Barclays Bank in 2018 and securitized into Series 2018-C46. The loan was declared delinquent in 2021 and moved to special servicing according to Trepp and Cred IQ.  Bankruptcy LINK