Joseph Nabavi puts $10M Chelsea residential project in bankruptcy

Joseph Nabavi sought bankruptcy protection for two buildings at 244 and 246 West 18th Street in Chelsea, Manhattan that he valued at a total of $10 million. He filed the petition in the Southern District of New York with the intention of holding off a UCC auction of the equity which was scheduled for Friday, May 19.

Navabi Declaration 244-246 West 18th Street

Joseph Nabavi bought 246 West 18th Street in 1994 and later partnered with the owner of 244 West 18th Street to acquire that property, then through the entity 246-18 Realty LLC borrowed $8 million from Emerald Creek Capital in October 2020.

On September 24, 2021, Joseph Nabavi submitted a new building construction project for a 26-unit, building at 246 West 18 Street in Chelsea, Manhattan. The plan was filed with the New York City Department of Buildings on September 24, 2021 under job number M00502161. It calls for the construction of a 12-story building.

By October 2022 all but three tenants had vacated 246 West 18th Street and all occupied rent stabilized unit, but one refused to vacate. The developer could not get construction financing with the holdout tenant, and so re-rented the other units on short-term leases to maintain cash flow.

In December 2022, Emerald Creek Capital alleged the loan was in default, and on March 3, 2023, Emerald sold the note to SME Capital Ventures.

In a sign of hope for the developers, on April 26, 2023, the holdout tenant agreed to a deal.

According to the filing, 244 West 18th Street is a vacant single room occupancy (SRO) building, and 246 West 18th Street is a 14-unit rental with 13 units occupied. The developers planned to convert the building into for-sale residential condominiums, but Covid and the “inability to relocate certain tenants in 246” impacted the process. The UCC lender sought a sale first on April 27, 2023 then rescheduled for May 19, 2023, which led to this bankruptcy filing.

The block

On this tax block, PincusCo has identified the owners of 10 of the 16 commercial properties representing 434,561 square feet of the 576,448 square feet. The largest owner is Hubb Nyc, followed by Joseph Nabavi and then Kano Real Estate Investors. On the tax block, there was one new building construction project filed totaling 100 square feet. It is a 26-unit, 100 square-foot mercantile (M) building submitted by Joseph Nabavi with plans filed September 24, 2021 and it has not been permitted yet.

The owner

The PincusCo database currently indicates that Joseph Nabavi owned at least two commercial properties with 39 residential units in New York City with 15,371 square feet and a city-determined market value of $5.6 million. (Market value is typically about 50% of actual value.) The portfolio has $8 million in debt, borrowed from Emerald Creek Capital and SME Capital Ventures. Within the portfolio, all identified are walkup properties. They are all located in Manhattan.

The owners according to the Department of Housing Preservation and Development includes Joseph Nabavi, head officer and Neville Grey, officer. The business entities are Direct Management Corp. and 18th Street Realty.

The surrounding

Within a 400-foot radius of 244 West 18 Street, PincusCo identified seven commercial real estate items of interests occurred over the past 24 months. Of those seven items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on June 9, 2022 for the $740,900 renovation of 5,072-square-foot residential (R-3) building with two residential units at 257 West 19th Street. Of those seven items, three were sales above $5 million totaling $1.6 billion. The most recent of the three was Witnick Real Estate Partners which bought the 14,220-square-foot, 25-unit rental (C7) on 228 West 18th Street for $9.8 million from Paul Kampa on March 9, 2022. Of those seven items, three were loans above $5 million totaling $459.5 million. The most recent of the three was PIMCO in which borrowed $367.7 million from Goldman Sachs, Deutsche Bank, and CitiBank secured by the 118,945-square-foot, one-unit office building (O5) on 249 West 17th Street and one other property on March 30, 2022.

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