Mezz lender Mack sues Fortis, Bank Leumi and Harel at troubled Seaport condo, seeking millions

Mack Real Estate Group sued Fortis Property Group, Bank Leumi, Valley National Bank and Harel Insurance Investments and Financial Services Ltd., alleging a wide range of improprieties in the intercreditor agreement laying out the relationship between Mack’s $66 million mezzanine loan and the senior lenders, which provided a $120 million secured loan on the condo Seaport Residences, with an alternate address of 161 Maiden Lane in the Financial District in Manhattan. Valley National Bank acquired Bank Leumi in a deal that was completed in April 2022.

Mack is seeking amounts ranging from $1.5 million to $120 million in a series of claims in the suit.

The 98-unit condo development, formerly known as 1 Seaport Lane, has suffered major construction issues including the death of a contractor in a fatal fall, as well as delays, with the media dubbing it the “leaning tower,” as it has a three inch lean to the north. The Real Deal reported in March 2022 that discussions between Fortis and Bank Leumi had broken down and the case could be heading for trial.

Mack Real Estate Group sued to recover its $66 million mezzanine loan, but this is not a pre-foreclosure filing, instead it is seeking a money judgment for a number of claims. Mack according to the filing is seeking, “Rescission and/or reformation of the Intercreditor Agreement (“ICA”) and the Second Amendment to the ICA; declaration of parties’ rights and obligations under ICA and Second Amendment to the ICA, including but not limited to that “Senior Lender” is not entitled, at law or in equity, to priority of payment, including as to any recoveries here; constructive trust, injunction, escrow or other equitable relief effectuating the same; punitive, special or exemplary damages not less than $50,000,000; restitution not less than $20,000,000, interest, costs and counsel fees.”

Direct link to Acris document. link

Senior debt suit 657252/2020 LINK

Mezzanine debt suit LINK