NYC CRE bankruptcies decline but pre-foreclosures rise in March

The number and dollar value of New York City commercial real estate bankruptcies declined last month compared with the prior month, but the number and volume of pre-foreclosures rose at the same time but both remained below the highest levels of late 2022, a PincusCo review of court data reveals. The data track actions of $1 million and up.

Property owners filed nine bankruptcies with a total value of $118 million in March, down from 10 cases valued at $193 million in February 2023. The volume of cases last month was lower than March 2022, when there were 12, but the dollar value of those cases was lower, at $83.5 million.

The highest value bankruptcy last month was the highly litigious owner of P.S. 64 in the East Village, Gregg Singer, who placed the property at 605 East 10th Street into bankruptcy to hold on to the property valued at the time at more than $100 million, accounting for nearly all the monthly total. A state Supreme Court judge had ordered a foreclosure sale of the property, based on the 2018 pre-foreclosure filing lender Madison Realty Capital filed. The other eight bankruptcies filed last month were all below $5 million.

This month, Singer filed additional paperwork in the case which placed the value of the building at $152 million, and all the liabilities at $125.9 million. The valuation of the building was not based on a new appraisal, since the filing says no appraisal has been made in the past year.

The number and dollar value of pre-foreclosures rose last month, with 23 cases filed with a value of $232 million. That was up from the volume in February when lenders filed 17 cases with a value of $182 million. But the volume was far below the action in March 2022 when lenders filed 34 complaints totaling $460 million.

The bulk of the pre-foreclosure dollar volume was due to two cases. The larger was a CMBS lender filing to foreclose on a the retail at 15 Central Park West, which is owned by Fortress Investment Group, Global Holdings, Zeckendorf Development, and Madison Capital. The next largest pre-foreclosure was in Midtown West, where Merchants Bank of Indiana filed to foreclose on a $36.8 million loan given to an affiliate of Abraham Leifer’s Aview Equities, which owns the 28-unit mixed-use building at 19 West 55th Street.