Extell, Princeton Real Estate, Robert Gans float $200M settlement for portfolio
623 11th Avenue (Credit - Google)
By Adam Pincus
Gary Barnett’s Extell Development, Joseph Tabak’s Princeton Real Estate Partners and property owner Robert Gans outlined a $200 million settlement agreement in bankruptcy court filings disclosed yesterday. As part of the settlement, Gans filed new bankruptcy petitions for the entities that own the portfolio of properties which includes a large development parcel on the west side of 11th Avenue between 45th and 46th streets. The deal anticipates it will close on or before December 22, 2022.
The settlement also includes requiring Gans to close on the purchase of a small building within that assemblage, and in turn Gans will get a release from state court actions against him including that he improperly transferred ownership of real property to his daughter.
The properties in the settlement include 533 West 27th Street, 175 Spring Street, 616-624 11th Avenue, 610 West 46th Street, 616-620 West 46th Street, 603 West 45th Street, 613-615 11th Avenue, 617 11th Avenue and 623 11th Avenue.
PincusCo reported in April 2022 that Eli Tabak’s Bluestone Group acquired the debt from the former senior lender Mack Real Estate Credit Strategies for $147.8 million on April 15. According to a document filed in the new case, the total outstanding balance plus penalties, fees and other costs on the loan was $178.2 million.
PincusCo reported in January that Bluestone had signed a purchase option to acquire the debt. PincusCo first reported in May that Extell was a partner with Bluestone.
In 2018, Mack provided $130.2 million of senior financing (which was later reduced to $116 million) and Bluestone provided a $17.76 million mezzanine loan that “almost immediately went into default,” according to court filings. The initial maturity date for the mezzanine loan was October 1, 2020.
Then in October 2021, Mack filed to foreclose on the loan, which it had declared was in default.
Bluestone acquired control of one of the original 11 properties, 533 West 27th Street, through a UCC foreclosure auction in August 2021.
According to court filings, “Subject to the terms of the Agreement, the CPBH Entities [Extell and Princeton] agree to accept a material voluntary reduction of their Allowed Claim as payment of the Settlement Amount… To obtain this benefit, the Debtors [Robert Gans] must pay the CPBH Entities an amount equal to the sum of (i) $200 million, plus Argo 45” [$4.5 million] plus interest on the $200 million, and legal fees after July 5, 2022.
“The Settlement Amount must be paid in cash and in full on or before December 22, 2022… The CPBH Entities have asserted claims in excess of $237,230,043 as of September 6, 2022 (which amount will continue to increase as a result of the accrual of interest, the incurrence of costs and expenses, and the reimbursement of professional fees and expenses). The Debtors and Gans have disputed such claims on multiple grounds…CPBH Entities (and their predecessors) vigorously dispute all of these allegations as baseless, deny all liability and have initiated litigation against the Gans Entities… the Settlement Agreement provides for a material voluntary reduction of the Allowed Claim and permits the Gans Entities continued time (in addition to the time spent to date) to consummate a transaction that would pay off the discounted Settlement Amount. The Agreement will be implemented through the consensual bankruptcy cases of all the Gans Entities (other than Gans), including the Mezz Borrower Debtors, the PropCo Debtors and Argo 45. Under the Agreement, within five (5) days of its execution and provided that the Purchase Option has been accelerated, the parties agreed to seek a temporary stay of all proceedings and deadlines in (i) the Foreclosure Action, (ii) the Argo 45 Action, and (iii) the Conveyance Action…The settlement will save the Debtors many millions of dollars…Moreover, because of the release, Gans will be released from any obligations he may have had with respect to his guarantees.”
Direct link to the property’s ACRIS page and link to DOB NOW portal.