The Real Deal New York

Midtown office building asking $31.5 million in bankruptcy sale

315 West 35th Street at center of long-running battle between owner, creditors

June 25, 2015 12:20PM
By Rey Mashayekhi

315 West 35th Street in Midtown (inset, from left: Joe Koicim and Peter Von Der Ahe)

315 West 35th Street in Midtown (inset, from left: Joe Koicim and Peter Von Der Ahe)

UPDATED, 6:48 p.m., June 25: A Midtown office building forced into auction after its owner filed for Chapter 11 bankruptcy will be available next month starting at $31.5 million.

An LLC formerly associated with developer and diamond dealer Aaron Chitrik owns the 14-story, 63,000-square-foot building at 315 West 35th Street, between Eighth and Ninth avenues. The property will be auctioned off in a bankruptcy sale July 13. The building’s creditors include Isaac Chetrit, who acquired the debt on the property for $10.75 million in 2010.

Chitrik bought the building for $16.2 million in 2006 with hopes of converting it into condos before the last economic downturn. Chetrit stepped in to acquire the property’s mortgage after the building’s lenders sought to foreclose on its debt, though that deal was complicated by a 2011 fraud suit related to a spelling error in the paperwork.

The limited-liability company eventually filed for Chapter 11 bankruptcy protection this April in an effort to save the building from being auctioned off, having defaulted on a nearly $25 million mortgage. The total undisputed debt on the property stands at around $29.5 million, according to a legal representative for the building, with another $7 million subject to dispute.

Chitrik told The Real Deal that he has not been associated with the entity that owns the building, 315 W 35th Associates LLC, since 2009 and no longer has “any interest” in property.

Chitrik transferred ownership of the building to the LLC’s current equity holders – named as Michael Sorotzkin and Haisha Deutch in the entity’s bankruptcy filing — in July 2013, according to sources involved in the bankruptcy sale.

But Chitrik remains the guarantor of the loan taken out on the building in 2006, according to attorney Stephen Meister, who represents Isaac Chetrit.

A Marcus & Millichap team led by Peter Von Der Ahe, Joe Koicim, J.D. Parker and John Krueger are handling the bankruptcy sale. The firm also handled the building’s listing in 2013, when it went on the market for $36 million.

The starting auction price for the vacant building is $500 per square foot. Von Der Ahe told TRD that the property’s sale is reflective of “the types of opportunities that, in 2010 and 2011 as we were coming out of the downturn, people thought were going to be all over the place.”

“By and large, that didn’t really happen in Manhattan at all,” he said. “Here we are in 2015, and one of these auctions are actually going down.”

Correction: A previous version of this article named Aaron Chitrik as the owner of 315 West 35th Street.