Courts roundup: Children’s Investment sues UES Ceruzzi project, alleges $40M in unmet guarantees, others
Courts roundup for Tuesday, March 30, 2021: There were no real estate bankruptcies of interest in New York City. There was one major loan suit, brought by Children’s Investment Fund detailed below, and one very small commercial foreclosure. There were three nuisance suits all related to prostitution which the city filed against properties in Manhattan.
Children’s Investment sues UES Ceruzzi project, alleges $40M in unmet guarantees: The lender Children’s Investment Fund is seeking specific performance for the completion of the project or money judgment from guarantors BVS Acquisition and two individuals who are co-executors of the estate of the late developer Louis Ceruzzi. Ceruzzi Properties and Kuafu Properties are leading the development. called the Hayworth at 1289 Lexington Avenue with an alternate address of 155 East 86th Street. The two suits, one for the mezzanine loan and another for the senior mortgage loans, does not explicitly state the amount sought, but notes it estimates $11 million left in construction spending and about $29.7 million in mechanic’s liens. Children’s Investment fund, an affiliate of Talos Capital, provided a $290 million construction loan in 2017, the Commercial Observer reported at the time.
“The contemplated Project was to consist of a residential and a retail condominium development containing approximately 229,553 square feet, located at 155 East 86th Street in the City, County and State of New York. . The Project was intended to include the following (each, a “Component”): (a) a residential Component (the “Residential Component”) consisting of 61 residential condominium units totaling approximately 151,930 net saleable square feet (and approximately 5,781 square feet of amenity space) and storage bins; (b) a retail Component (the “Retail Component”) consisting of two units totaling approximately 30,941 net rentable square feet; and (c) additional residential specific amenities.”
“The Loan Agreement defines “Senior Initial Advance Date” as March 31, 2017 (Exhibit A § 1.1, at 46). Forty-two months from such date is October 1, 2020 (the “Outside Completion Date”).” On March 8, 2021, Secured Parties sent a letter dated March 5, 2021 to Borrower and Guarantors (the “Acceleration Notice”) wherein they reminded Borrower that it failed to pay interest due and payable on the Payment Dates in March 2020 through to February 2021 (inclusive) and, “multiple Events of Default have occurred and are continuing under the Loan Agreement by reason of Borrower’s failure to timely make the required interest payments.” The Acceleration Notice further advised Borrower that as a result of such Events of Default, Plaintiff is exercising its right to accelerate the Loan in full.”
“Upon information and belief, it will cost in excess of $11,000,000.00 to Complete the Project, such amount does not include certain additional amounts that third-party contractors claim are still due and owing to them, which are also an obligation of Guarantor under the Completion Guaranty. As of February 24, 2021, there have been at least 21 mechanic’s Liens recorded against the Property, and total approximately $29.7 million. None of these mechanic’s Liens are Permitted Encumbrances.” Mezzanine suit LINK Senior Loan suit LINK
$334K commercial foreclosure in Bronx: Normandy Capital Trust filed to foreclose on $333,750 in loans secured by 401 Harding Park in the Bronx. LINK
City alleges prostitution in three Manhattan properties: The city filed nuisance complaints against three properties in Manhattan. The filings each seek to ban any commercial activity in the portion of the building where the alleged activity took place for up to a year and to fine the responsible party $1,000 per day. The properties are 28-30 East End Avenue LINK, 419 East 82nd Street LINK and 99 Canal Street LINK.