Mack alleges $31.5M Chetrit default in Times Square, weeks after similar claim in Hudson Yards

Lender Mack Real Estate Group alleged in a lawsuit filed Friday that principals of the Chetrit Group have defaulted on a $31.5 mezzanine loan secured by an interest in the stalled hotel redevelopment at 250 West 43rd Street in Times Square, Manhattan, and that $6.5 million is due immediately. The filing comes about three weeks after Mack Real Estate Group sued a Chetrit Group principal over a loan secured by a stalled Hudson Yard hotel ground up construction project at 545 West 37th Street, claiming it was owed an $18.5 million loan guaranty, as PincusCo first reported at the time.

The Chetrit Group bought the Hotel Carter, in the middle of the block on 43rd Street between Seventh and Eighth avenues, in 2015 for $191.5 million. The Wall Street Journal reported at the time that the hotel was in poor condition and would require $125 million to bring it, “up to even three-star standards.”

Times Square case LINK

Hudson Yards case LINK

Court filings represent the position of one party and are not necessarily accurate or complete.

In the Times Square case, filed in New York State Supreme Court, Mack Real Estate Group claims Meyer Chetrit and Joseph Chetrit owe an alleged $6.5 million payment guaranty related to the $31.5 million junior mezzanine loan. On this property, Mack also provided Chetrit Group a $120.5 million senior loan in August 2022, which is not mentioned in this litigation.

According to the complaint, this is a “Motion for Summary Judgment in Lieu of Complaint, seeking an Order, pursuant to CPLR 3213, awarding judgment against defendants Meyer Chetrit and Joseph Chetrit (“Defendants”), jointly and severally, based upon Defendants’ indebtedness under a Junior Mezzanine Loan Payment Guaranty executed as of August 1, 2022 (the “Payment Guaranty”), in Plaintiff’s favor: (a) in the principal sum of $6,500,000…This is a straightforward action brought via motion for summary judgment in lieu of complaint to enforce an instrument for the payment of money only, to wit: a limited payment guaranty executed by Defendants in connection with a corresponding junior mezzanine loan to 250 West 43 Junior Mezz LLC, 250 West 43 Junior Mezz II LLC, and 250 West 43 Junior Mezz III LLC, as mezzanine borrowers (“Borrower”), in the principal amount of $31,507,279.16 (the “Loan”), which Loan is in maturity default, entitling Plaintiff to immediate judgment against Defendants jointly and severally in the principal amount of $6,500,000… Borrower agreed to pay the principal sum of the Note, interest on the unpaid principal sum, and all other amounts due under the Loan Agreement and other Loan Documents, by the Maturity Date of the Loan, which was August 1, 2024… By letter dated January 12, 2023 , Administrative Agent notified Borrower and Defendants that one or more Events of Default have occurred under the Loan Agreement as a result of, inter alia, Borrower’s failure to pay the Administrative Agent the entire Monthly Debt Service Payment that was due and payable on the Payment Date occurring on December 9, 2022.”

Meyer Chetrit of 512 7th Avenue, LLC, submitted a major alteration application for a $15,939,730 renovation of the hotel building at 250 West 43rd Street. The plan was filed with the New York City Department of Buildings on March 17, 2017 under job number 123035642. It calls for a rehab of the 23-story building. The project is described in the filing as: renovate hotel and accessory use/occupancies at cellar, first through 23rd floors and roof bulkhead and transfer bulk (no zoning enlargement proposed) amending room count throughout. Amended certificate of occupancy to be obtained. The Department of Buildings approved the project on January 16, 2020, but has not issued permits.

The property

The hotel building in Times Square has 238,818 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 145 feet and is 100 feet deep with a total lot size of 14,500 square feet. The zoning is C6-5 which allows for up to 10 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $28.5 million. The most recent loan totaled $120.5 million and was provided by Mack Real Estate Group on August 1, 2022.

Prior sales and revenue

The 238,818-square-foot property generated revenue of $12 million or $50 per square foot, according to the most recent income and expense figures.

Development

For the tax lot building, it received its initial certificate of occupancy on March 7, 2013.

Violations and lawsuits

According to city public data, the property has received nine DOB violations, $37,430 in ECB penalties, and $39,530 in OATH penalties in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

The neighborhood

In Times Square, The majority, or 58 percent of the 10.1 million square feet of commercial built space are office buildings, with hotel buildings next occupying 30 percent of the space. In sales, Times Square has the 10th highest sale turnover among other neighborhoods in the city with $1 billion in sales volume in the last two years. For development, Times Square has near average amount of major developments among other neighborhoods and is the 21st highest in Manhattan. It had 1.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 15 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 10 commercial properties representing 1,243,818 square feet of the 2,178,824 square feet. The largest owner is Chetrit Group, followed by Rudin Management and then Tishman. On the tax block, there was one new building construction project filed totaling 34,313 square feet. It is a 34,313 square-foot mercantile (M) building submitted by NYC Economic Development Corporation and filed by Jhaelen Hernandez-Eli with plans filed January 27, 2020 and it has not been permitted yet.

The owner

The PincusCo database currently indicates that Chetrit Group owned at least 38 commercial properties with 2,287 residential units in New York City with 4,663,881 square feet and a city-determined market value of $877.7 million. (Market value is typically about 50% of actual value.) The portfolio has $1.7 billion in debt, with top three lenders as Bank of Montreal, Starwood Mortgage Capital, and G4 Capital Partners respectively. Within the portfolio, the bulk, or 49 percent of the 4,663,881 square feet of built space are elevator properties, with office properties next occupying 27 percent of the space. The bulk, or 70 percent of the built space, is in Manhattan, with Queens next at 26 percent of the space.

The owners according to the Department of Housing Preservation and Development includes Meyer Chetrit, head officer and Lilly Sirkin, site manager. The business entity is 250 West 43 Owner Llc.

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