Madison Realty to acquire Isaac Hager’s bankrupt W’burg hotel dev site, had $27.5M in 2019 debt

Josh Zegen’s Madison Realty Capital is expected to close today on the acquisition of Isaac Hager’s bankrupt Williamsburg hotel project at 159 Broadway, that had $27.5 million in loans, according to documents filed with the U.S. Bankruptcy Court in Manhattan on Thursday, November 10.

Hager, who also signs with the name Yitzhok Hager, is the founder of the Brooklyn development firm Cornell Realty Management. He acquired the development site in 2017 for $26.25 million and obtained the loans in 2019.

Even as Hager lost this site, he just partnered with Daryl Hagler to buy a Crown Heights site for $43 million, The Real Deal reported last week. At that location, Bruce Eichner’s Continuum Company sought to build a 1,500-unit residential development.

Last week, PincusCo reported that Madison Realty Capital acquired another bankrupt Brooklyn development site that had a $28 million loan. That site had been owned by Bo Jin Zhu.

At the Williamsburg location, in 2019 Hager’s Cornell Realty Management through the entity WB Bridge Hotel LLC as borrower signed a loan agreement with lender Madison Realty Capital and Eli Tabak’s Bluestone Group for $27.5 million at 159 Broadway. The deal closed on November 1, 2019 and was recorded on November 15, 2019. A team at Galaxy Capital arranged the financing.

Cornell Realty Management submitted a new building, mixed-use construction project for a 92,733 square-foot hotel and residential (R-1) building at 159 Broadway with 235 hotel rooms on floors two through 16, and 21 apartments on floors 20 to 25. The plan was filed on February 21, 2018 and was permitted on January 14, 2020. It calls for the construction of a 277-foot tall, 26-story building and was filed with the New York City Department of Buildings under job number 320911233. The project is described in the filing as: proposed 26-story mixed use development as per plans.

Madison provided a $21.35 refinance and gap loan in July 2019, and the new debt provided included a $2.28 million building loan, a $369,000 project loan and a $3.5 million mezzanine loan supplied by Bluestone Group. The last time the property sold was November 27, 2017, when Cornell bought the site for $26,249,000. Madison and Bluestone have provided financing for other Hager properties including 85 Flatbush Extension and 200 Kent Avenue.

Hager placed the property in bankruptcy in December 2020, 7:20-bk-23289.

The bankruptcy sale was managed by Greg Corbin, president of bankruptcy and restructuring at Rosewood Realty Group. In a letter to the court last week, Corbin noted that a valuable Industrial and Commercial Abatement Program or ICAP tax incentive, worth $3 million per year, had expired, thereby diminishing the relative value of the project.

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