The owner of a vacant parcel on the south side of Bryant Park on which a 32-story hotel is planned could lose the prized site it bought for $45 million if its lender is victorious in a foreclosure lawsuit filed this week.
An entity of Ascent Real Estate Advisors, 40th St. Partners, purchased 14-20 West 40th Street in September 2006 and at the same time took out a $43.9 million short-term mortgage for the property from Petra Capital Mortgage, city property records show.
Petra CDO, which now holds the mortgage as part of a complex security, is claiming in a foreclosure lawsuit filed Monday in Manhattan State Supreme Court that the developer has defaulted on its loan.
The developer hired architect Morris Adjmi who designed the plans for the hotel and residential tower that is to be constructed of gray limestone with silver aluminum detailing. The building won approval from the Department of City Planning in March 2008. The hotel is scheduled to be part of the Starwood brand, said John Porges, a principal with 40th St. Partners.
The mortgage was an acquisition and pre-development loan to buy the parcel, now used as a parking lot, and meanwhile the developer is seeking construction financing, Porges said.
The short-term mortgage was due to be paid in full plus interest on October 9, 2008, but one day earlier the parties struck a deal to extend the loan until April 9, with two main conditions, the lender said in its complaint: the borrower had to pay $1 million when the deal was struck, and another $2 million by February 9, 2009
Fortieth St. Partners made the first payment, but not the second, the lawsuit says, putting the loan in default.
Porges said in an interview yesterday that because of the ongoing litigation he could not comment on the specifics of the complaint, but assured that the dispute could be resolved.
“I would say we think the long-term viability of this project is positive and we remain desirous of trying to come to an amicable resolution with the lenders,” he said.
A spokesperson for the lender could not be reached for comment.
The developers filed plans in May 2008 with the city Department of Buildings but they were disapproved in September, the agency site says. Porges said he expects to win DOB approval in the future.