Investors sue developers at stalled Flushing project

Eight investors are seeking to recover $2 million they claim they invested in a stalled Flushing project at 136-25 41st Avenue led by developers Wing Fung Chau and Hang Zhao. but since 2020 the project has been “experiencing financial difficulties.”

The complaint alleges that in February 2023, the managers of the project informed the plaintiffs that they were to surrender their stake for no consideration. According to the filing: “As of today, despite the investment from Plaintiffs in the amount of approximately $2 million dollars and the loan in amount of $4.1 million dollars, the Project is but a huge hole on the ground… Plaintiffs have not received tax return[s], accounting or financed record of both Holding Company and Property Owner LLC since 2016.”

In 2016, Wing Fung Chau and Hang Zhao paid Daniel Hogan $8.6 million for the site, and in 2019 refinanced the original acquisition loan with a $4.1 million loan from Ponce Bank. The complaint says that in 2022 the managers put the property up for sale through the brokerage Lin Pan Realty Group, allegedly without notifying the plaintiffs.

The developer Hang Zhao through the entity 136-25 41 Realty LLC submitted a new building construction project for a 39-unit, 22,906 square-foot hotel (R-1) building for the site. The plan was filed with the New York City Department of Buildings on October 25, 2017 under job number 421563640. It calls for the construction of a eight-story building.

Earlier this month, on March 1, Ponce Bank filed a pre-foreclosure action alleging the $4.1 million loan was in default.

The property

The parcel has frontage of 50 feet and is 89 feet deep with a total lot size of 4,450 square feet. The lot is irregular. The zoning is C4-3 which allows for up to 3.4 times floor area ratio (FAR) for commercial and up to 2.43 times FAR for residential. The city-designated market value for the property in 2022 is $668,000.

Violations and lawsuits

According to city public data, the property has received $48,125 in ECB penalties and $48,425 in OATH penalties in the last year.

The neighborhood

In Flushing, The bulk, or 45 percent of the 37.8 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 20 percent of the space. In sales, Flushing has near average sales volume among other neighborhoods with $682.1 million in sales volume in the last two years and is the 4th highest in Queens. For development, Flushing has near average amount of major developments among other neighborhoods and is the 5th highest in Queens. It had 2.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 7 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 10 of the 110 commercial properties representing 280,867 square feet of the 722,250 square feet. The largest owner is Michael Xuewu Tang, followed by Hsueh Ying Wu and then Judson Realty Co.. On the tax block, there was one new building construction project filed totaling 22,906 square feet. It is a 39-unit, 22,906 square-foot hotel/dormitory/shelter (R-1) building submitted by Hang Zhao with plans filed October 25, 2017 and permitted September 22, 2020.

The surrounding

Within a 400-foot radius of 136-25 41 Avenue, PincusCo identified two commercial real estate items of interests occurred over the past 24 months. Of those two items, one was in new building development. It was a new building permit issued on August 3, 2021 for a 39,071-square-foot residential (R-2) building with 44 residential units at 136-80 41st Avenue. One of those two items was a loan which Watermark Capital Group borrowed $13.2 million from Bridge City Funding secured by the 11,952-square-foot, one-unit industrial (M4) on 138-25 Barclay Avenue on February 2, 2023.

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