Maverick by auction acquires Steven Croman’s Kips Bay rentals with $43M judgment

Maverick Real Estate Partners acquired four Croman Real Estate rental building at 208 to 214 East 25th Street in Kips Bay, Manhattan, that as of this month had a total judgment of $43.4 million, through a foreclosure auction held November 13, 2024, in Manhattan, according to a foreclosure auction surplus monies form filed the following day.

In late October, the auction was put on the calendar, despite Steven Croman putting the properties in bankruptcy in 2022 and a last minute attempt to halt the sale. The bankruptcy stay was lifted in March 2023, in a ruling in which that judge dismissed the bankruptcy petition as “a bad faith filing.”

The state court judge, Francis A. Kahn, signed an order on November 12 which would have postponed the November 13 auction if Croman had posted a special type of $30 million bond, called an undertaking. Croman protested the amount was too high, but to no avail.

In Kahn’s November 12 order, the judge expressed skepticism related to Croman’s dependability making court payments.

“The purpose of the undertaking, and necessarily the amount, is to… guarantee payment of any deficiency,” Kahn wrote. Then continued, “the Defendants have proved themselves as unreliable in cooperating with the receiver. Indeed both Defendants [Croman the individual and Croman’s owner entity] were adjudicated in contempt of the Court’s order appointing the receiver by failing to remit substantial rents to the receiver. The Court is not sufficiently confident that such conduct may not recur and, therefore, two months rent roll for the buildings shall be included in the amount of the bond…” as well as more than $29 million for a deficiency, totaling more than $30 million.

An affiliate of Croman Real Estate filed to place four adjacent Kips Bay buildings with a $25 million loan in bankruptcy protection in November 2022, to defend ownership while note holder Maverick proceeds with foreclosure litigation. However the bankruptcy judge characterized the filing as “bad faith” in a March 2023 ruling, and the stay was lifted. In a final attempt to halt the sale, Croman filed a notice of appeal to First Department Appellate Divisision, complaining that the $30 million bond the state court judge had set as part of WHAT was too high. the on November

State Court link 850189/2021

Maverick Real Estate Partners, which has been one of the most active note buyers in the city, filed to foreclose on a loan with an original principal of $25 million given to Croman Real Estate in 2016 by BankUnited, and secured by four buildings at 208-214 East 25th Street in Kips Bay in Manhattan. The borrower, 208-214 E. 25th St, LLC, is controlled by Steven Croman, a controversial landlord who owns a large multifamily portfolio and served eight months in jail for mortgage and tax fraud.

On August 12, 2021, Maverick Real Estate Partners bought the note on the $25 million loan and the next day filed a pre-foreclosure action. The four walkup buildings have a total of 85 residential units and of those 71 are free market, 11 are rent controlled or rent stabilized, two are vacant and one is employee occupied.

According to the bankruptcy petition, filed in the Southern District of New York by bankruptcy expert David Goldwasser of FIA Capital Partners, the buildings generate monthly rental income of $269,700, and the properties are estimated to be worth some $30 million.

The petition states Croman’s entity made up for Covid-era tenant rental shortfalls to cover the approximately $110,000 in monthly mortgage payments to the lender at the time, BankUnited. The petition claims Croman’s entity was current through July 2021, but then a “deficiency of some $16,360.90 arose…” and the next month BankUnited sold the loan to Maverick, which commenced the foreclosure action.

Since the new lender alleged the note was in default, it began charging a 24 percent interest rate and refusing to accept loan payments, the petition alleges. As for the foreclosure case, according to court filings, the judge Francis A. Kahn III in May 2022 ordered the appointment of a receiver, Hayley Greenberg, but that receiver sent a letter to the judge in August 2022 alleging the Croman entities, at the time of the letter, had not turned over important records, thus frustrating her appointment.

In the bankruptcy petition, Croman is cast as a victim of overaggressive lending tactics. “I have dealt with a number of properties plagued by the scourge of default interest,” Goldwasser writes in the petition, arguing that the chapter 11 petition is warranted because the lender is using “predatory” means to increase the loan amount so it cannot be refinanced.

Steve Croman was accused of similar tactics as a landlord, according to a New York State Attorney General press release from 2017.

“Croman’s employees allegedly created a false record for litigation by refusing to acknowledge receipt of tenants’ rent checks and then suing them for unpaid rent—a deliberate fraud upon the court.”

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