Walter & Samuels entity puts highly litigated NoHo rental in bankruptcy, $15M in debts

An investment group led by David Berley’s Walter & Samuels placed a NoHo rental building just west of Bowery at 4 Bleecker Street into bankruptcy, declaring it was worth just $1.6 million but had debts of $15 million.

The petition was filed July 16, 2024, in U.S. Bankruptcy Court in Manhattan.

Case 24-11237-mew LINK
Chapter 11 pdf

The property has a complex ownership structure and most critically, according to the bankruptcy petition, the nine residential units that make up the residential portion of the property were not properly registered with the New York State Department of Homes and Community Renewal.

The redevelopment plan that led to the bankruptcy began more than a decade ago. In 2013, the prior owner signed a 99-year lease with a master lease tenant, 4-6 Bleecker Street LLC, an affiliate of upstate investor Douglas Ballinger. The lease was valued at $4.1 million and covers just the residential portion of the building containing the nine units on floors two through four.

The plan was that the Walter & Samuels group would buy 4 Bleecker Street, Ballinger would convert the nine residential units into condos, and the Walter & Samuels group would control the retail at the base of the building.

The parties set the plan in motion, and in June 2014, they paid $14.9 million for 4 Bleecker Street and an adjacent retail condominium unit at 316 Bowery. But problems began almost immediately.

The petition says, “Certain residential tenants brought a rent overcharge action. By decision entered on October 15, 2015 by the New York County Supreme Court, later affirmed by the Appellate Division in 2018, the rents were reset drastically lower, and the tenants were awarded about $3,000,000 in damages, including treble damages… [In another court action, Ballinger] asserting that the Supreme Court-ordered rent reductions breached the purchase and sale agreement provision between [Ballinger] and the Prior Owner… as incorporated into the Master Lease. The Supreme Court thus held the [Walter & Samuels group] liable (as successor interest to the Prior Owner) to [Ballinger] for the drop in rental income… for five years, [Ballinger] has paid the Debtors nothing on its obligations under the Master Lease.”

In addition, the Walter & Samuels Group borrowed $6.85 million in 2015. The investors paid down about half that loan after selling the commercial condo at 316 Bowery, also known as 2 Bleecker Street, for $3.2 million in April 2024.

The petition continues, “In addition to the $3,138,630 mortgage claim, the Debtors estimate $59,603 of New York City lien claims and about $11,941,622 of total general unsecured claims. Among the general unsecured claims are disputed and unliquidated claims of $10,000,000 asserted by [Ballinger], $10,000 asserted by certain residential tenants, $227,338 asserted by Rosenberg & Estis and $410,539 asserted by Holland & Knight.”

The property

The mixed-use building with 5 residential units in NoHo has 7,592 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 50 feet and is 40 feet deep with a total lot size of 2,157 square feet. The zoning is C6-1 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 3.44 times FAR for residential. The property is in the NoHo East Historic District. The city-designated market value for the property in 2022 is $5.1 million. The most recent loan totaled 0.0 and was provided by Northeast Bank on October 20, 2022.

Prior sales and revenue

This property was sold with another property for $14.9 million on June 30, 2014.

The 7,592-square-foot property generated revenue of $383,016 or $50 per square foot, according to the most recent income and expense figures.

Violations and lawsuits

According to city public data, the property has received $12,500 in ECB penalties and $13,700 in OATH penalties in the last year.

The property was involved in zero lawsuits and one bankruptcy over the past two years. The bankruptcy was filed on July 16, 2024, by Larry Miller, Walter & Samuels, and Lawland Properties citing assets of $1.6 million.

The neighborhood

In NoHo, The majority, or 55 percent of the 3.8 million square feet of commercial built space are office buildings, with elevator buildings next occupying 14 percent of the space. In sales, NoHo has near average sales volume among other neighborhoods with $314.7 million in sales volume in the last two years and is the 24th highest in Manhattan. For development, NoHo has near average amount of major developments among other neighborhoods and is the 34th highest in Manhattan. It had 403,001 square feet of commercial and multi-family construction under development in the last two years, which represents 11 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of six of the 19 commercial properties representing 324,711 square feet of the 475,589 square feet. The largest owner is Aryeh Realty, followed by Blackburn Point Realty Capital and then Empire State Realty Trust. There are no active new building construction projects on this tax block.

The owner

The PincusCo database currently indicates that Walter & Samuels owned at least nine commercial properties with five residential units in New York City with 535,197 square feet and a city-determined market value of $126.8 million. (Market value is typically about 50% of actual value.) The portfolio has $112.1 million in debt, borrowed from Bank of America and Citibank. Within the portfolio, the bulk, or 82 percent of the 535,197 square feet of built space are office properties, with specialty properties next occupying 14 percent of the space. They are all located in Manhattan.

The owners according to the Department of Housing Preservation and Development includes Max Buri, head officer and Arvind Ramsarran, site manager. The business entity is 4-6 Bleecker Street Llc.

The surrounding

Within a 400-foot radius of 6 Bleecker Street, PincusCo identified three commercial real estate items of interests occurred over the past 24 months. Of those three items, two were sales above $5 million totaling $14.5 million. The most recent of the two was Steven Gautier-Winther which bought the 7,325-square-foot, six-unit mixed-use building (S9) on 332 Bowery for $8.8 million from Joseph Bachman on July 31, 2023. One of those three items was a loan which Dovetail + Co. borrowed $10.2 million from Metropolitan Commercial Bank secured by the 12,385-square-foot, two-unit hotel (HH) on 338 Bowery on August 18, 2022.

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