Xin Development Group places $123M Hell’s Kitchen condo in bankruptcy

Xin Development Group filed to place its 92-unit condominium project Bloom on 45th at 500 West 45th Street in Hell’s Kitchen, Manhattan, which it claims is worth $123 million, into bankruptcy protection on January 7, 2024, under pressure from its lender BH3 Management which owns $79.7 million in senior and mezzanine debt. The signatory for the petition was Sheng Zhang, Xin Development CEO.

Case 24-10021

Bloom on Forty-Fifth affidavit pdf

Xin Development Group, a division of the China-based Xinyuan Real Estate, sued the debt holder BH3 Management in November 2023 at the 92-unit condominium project, as the parties battled over a forbearance agreement. The developer filed the bankruptcy through the entities Hudson 888 Owner LLC

In 2021, Xin Development cut the senior debt on the project, which was completed in 2020. 

According to the bankruptcy petition, 60 units of the 92 units are unsold. Xinyuan also owns the five commercial condo units which are “98%” leased to tenants including Target, which together pay $3.4 million in annual rent.

The commercial units are valued at about $53 million, while the unsold residential units are valued at $70 million, leaving an estimated $40.3 million in equity, with the senior debt as of late November 2023 totaling $58.9 million and the mezzanine debt at $20.8 million, resulting in the total debt at $79.7 million.

The project was negatively impacted by Covid, by the increase in interest rates, and “regulatory restrictions and limitations on cross-border transfers of funds outside of China,” according to the petition.

It says BH3 Management has been “aggressive” in an effort to foreclose. The lender, the petition says, alleges the latest forbearance agreement is in default and can initiate a UCC sale, so in response in November 2023 Xin Development filed a suit to block such as sale, through the state court action, 161355/2023.

The state court judge agreed to a temporary halt, with a hearing scheduled for today, January 8.

The petition alleges Xin Development has made good faith efforts to resolve the dispute, but claims the lender has not.

The petition says, “Due to the adverse market forces described above, sales of residential condominium units have not met projections. As a result, while the cash flow from the retail leases and the condominium sales to date is adequate to fund all necessary operating expenses of the Project, it is not sufficient to also cover debt service in full as it comes due.

“Accordingly, while Debtors are not insolvent on a balance sheet basis, they are insolvent under an ‘equitable’ or cash-flow insolvency analysis and have a bona fide need for protection from their creditors and to effect a financial restructuring… Sheng became Chief Executive Officer of Xin Development Group International LLC in June 2023.”

Direct link to the property’s ACRIS page.