Madison Realty files $48M pre-foreclosure at REEC site in East Village

Madison Realty Capital filed to foreclose on $48 million of first mortgage debt, alleging Real Estate Equities Corp. defaulted on its loan obligations at the office and retail development site 1 St. Marks Place at the corner of Third Avenue, in the East Village.

REEC filed plans in 2018 to build an approximately 45,000-square-foot office building with the address 1 St. Marks Place. The parcels also have the addresses 23, 25 and 27 Third Avenue. The city issued a new building permit for the project in February 2020.

The property has at least seven mechanic’s liens, according to the complaint.

The loan, composed of a $13 million acquisition loan, an $18.6 million building loan and a $16.3 million project loan, was given in 2019. REEC acquired the ground lease valued at $29.1 million, in 2017, then filed plans for the commercial building in 2018 and the city issued permits in February 2020. In addition, REEC cleared the site with several demolitions. But construction has stalled.

The suit alleges: “failure to make the Leasehold Rents payment under the Ground Lease for the months of October 2020 and continuing thereon…”

Madison send a default notice in November 2020, the complaint says. “As more particularly is set forth in that certain notice dated November 11, 2020 (the “Default Notice”), amongst other things, the Borrower was advised of the Acquisition Loan Events of Default under the Acquisition Loan Documents.”

In February 2021, the ground landlord filed a suit accusing REEC of not making ground rent payments, as PincusCo reported at the time.

The court filings are the positions of one party and are not necessarily accurate or complete.

Link to lawsuit

Direct link to Acris document. link