Madison Realty files $81.5M pre-foreclosure at Empire Management hotel in NoMad

Madison Realty Capital filed an $81.5 million pre-foreclosure in New York State Supreme Court in Manhattan yesterday alleging several loans Santander Bank gave to Fred Ohebshalom’s Empire Management and secured by 250 Fifth Avenue in NoMad, Manhattan, were in default. Madison Realty Capital, which bought the loans in March 2024 under the name 250 Fifth Ave Lender 1 LLC, alleges the loan matured on January 31, 2024, and have not been repaid. In addition, the complaint alleges there are mechanics’ liens on the property, which also constitutes a default, among other allegations.
Court filings represent the position of one party and are not necessarily accurate or complete.
Empire Management owns a large portfolio of mostly large rental buildings.
The PincusCo database, which is not confirmed by Empire Management, currently indicates that Empire Management owned at least 25 commercial properties with 1,303,383 square feet, 1,107 residential units and a city-determined market value of $256 million. (Market value is typically about 50% of actual value.) The portfolio has $310.7 million in debt, with top three lenders as Barclays, Santander Bank, and New York Community Bank respectively. Within the portfolio, the bulk, or 83 percent of the 1,303,383 square feet of built space are elevator properties, with H1 properties next occupying 10 percent of the space. They are all located in Manhattan.

Case 850306/2024 LINK

Fred Ohebshalom’s Empire Management through the entity Cosmic Realty Partners LLC as borrower signed a loan agreement with lender Santander Bank valued at $81.5 million for a hotel conversion project at 250 Fifth Avenue in Nomad. The deal closed on August 26, 2019, and was recorded on September 13, 2019.
Empire added floors to construct a 23-story hotel with 188 rooms. The last time the property sold was June 17, 2013, for $15,000,000.

The property

The condo building in NoMad has 118,664 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 55 feet and is 150 feet deep with a total lot size of 10,444 square feet. The lot is irregular. The zoning is C5-2 which allows for up to 10 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing.

Violations and lawsuits

According to city public data, the property has received two DOB violations and $600 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 NoMad, The majority, or 66 percent of the 13 million square feet of commercial built space are office buildings, with hotel buildings next occupying 15 percent of the space. In sales, NoMad has near average sales volume among other neighborhoods with $298.7 million in sales volume in the last two years and is the 25th highest in Manhattan. For development, NoMad has near average amount of major developments among other neighborhoods and is the 15th highest in Manhattan. It had 2.4 million square feet of commercial and multi-family construction under development in the last two years, which represents 18 percent of the neighborhood’s built space.

The block

On the tax block, there were two new building construction projects totaling 398,940 square feet. The largest is a 266-unit, 226,649 square-foot hotel/dormitory/shelter (R-1) building submitted by Flag Luxury Group and filed by Richard Murphy with plans filed January 20, 2016 and permitted April 23, 2018. The second largest is a 41-unit, 172,291 square-foot residential (R-2) building submitted by Boris Kuzinez and filed by Yoram Barel with plans filed September 23, 2016 and permitted April 18, 2024.

The surrounding

Within a 400-foot radius of 252 5 Avenue, PincusCo identified eight commercial real estate items of interests occurred over the past 24 months. Of those eight items, two were in new building development. There were two new building permits. The most recent of these two items was a permit on April 18, 2024 for a 172,291-square-foot residential (R-2) building with 41 residential units at 262 Fifth Avenue. One of those eight items was a sale which Edison Properties bought the 431,428-square-foot, 11-unit office building (O6) on 13 West 27th Street and eight other properties for $396.4 million from Edison Properties on August 4, 2023. Of those eight items, five were loans above $5 million totaling $332 million. The most recent of the five was Five Points Development in which borrowed $109.8 million from Madison Realty Capital secured by the 0-square-foot development site (V1) on 262 5th Avenue on November 13, 2023.
Direct link to the property’s condo ACRIS page
Direct link to the property’s legacy ACRIS page and link to DOB NOW portal.