Judge orders $196M foreclosure sale of Dune Real Estate’s Midtown East office, retail

A New York State Supreme Court judge ordered the sale of the retail and office building owned by Dune Real Estate Partners at 111 East 59th Street in Midtown East, in Manhattan, five months after lender LoanCore Capital filed an action to foreclose on the loan with an initial principal of $196 million.

Dune Real Estate Partners along with partners Princeton International Property and Empire Capital Holdings bought the building in 2015 for $170 million with financing from Deutsche Bank. Two years later, in 2017 LoanCore refinanced that loan with a total of $196 million which included construction financing totaling $42 million. In the October pre-foreclosure action, LoanCore alleged the current outstanding debt is $193.4 million.

Empire Capital and Princeton International Property sold their stakes in 2018, according to people familiar with those transactions said, and are no longer involved with the property.

Dune did not respond to a request for comment. The judgment of foreclosure and sale was dated March 31. No date has yet been set for the auction.

Case LINK

LoanCore’s motion for summary judgment in the foreclosure action was unopposed by Dune, which has allowed the court case to proceed relatively quickly. Insiders speculated that LoanCore brought the foreclosure case instead of simply Dune turning over the property as a deed-in-lieu of foreclosure in order to clear the property of liens, which are wiped out in a foreclosure auction.

According to the original complaint, “On September 8, 2017, Plaintiff LoanCore Capital Credit REIT LLC made three loans to Defendant 111 E. 59th Street JV SUB, LLC (“Borrower”), owner of the fee interest in the Premises (the “Loans”). The Loans were secured by, among other things, mortgages on the Property. The Borrower initially defaulted on the Loans by failing to pay the interest due and payable to Lender on the payment date of July 9, 2020. Subsequently, the Borrower defaulted on the Loans by failing to repay in full the Loans and all outstanding principal and accrued interest (the “Debt” and the “Other Debt”) on September 9, 2020 (the “Maturity Date”).”

Property

The 115 East 59th Street parcel has frontage of 60 feet and is 200 feet deep with a total lot size of 12,050 square feet. The lot is irregular. The zoning is C5-2.5 which allows for up to 12 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $73.7 million.

The office building in Lenox Hill has 170,511 square feet of built space according to PincusCo analysis of city data.

The 170,511-square-foot property generated revenue of $13.7 million or $80 per square foot, according to the most recent income and expense figures.