The Real Deal New York

Brooklyn developer to face bank in condo default case

July 31, 2008 02:43PM
By David Jones

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Brooklyn developer Moshe Feller is scheduled to face off in court next month against Corus Bank, which filed suit against his Karl Fischer-designed Kensington condominium development about two months after contractors walked off the job.

Corus filed suit in June against Caton on the Park, a 107-unit condo building that has sat idle since April 4, when the New York City Department of Buildings issued a stop work order.

Corus loaned Feller $32.8 million in 2006 to develop the condominium at 23 Caton Place. Feller acquired the site, formerly owned by Kensington Stables, for $6.25 million in 2005.

Corus declined to comment and Feller could not be reached for comment.

Corcoran Group was lined up to handle sales and marketing for the project, but it has remained only 40 percent completed since April.

Fischer, who has teamed with Feller on a number of projects in Greenpoint said in an interview earlier this month that he was not sure where things stood with construction on the site.

“I suspect it had to do with the financial crunch,” said Fischer. “I haven’t spoken with [Feller] in quite a while now.”

Feller filed a motion in March against Sagecrest II, a Greenwich, Conn.-based hedge fund that provided mezzanine debt for the project and was scheduled to sell off its interest in the property, according to court documents. Feller was trying to stop Sagecrest from selling its mezzanine debt while he tried to work out a deal with Corus.

Sagecrest was supposed to meet with the developer regarding the status of negotiations with Corus Bank, court documents showed.

Parent company Corus Bancshares has been rocked by losses related to bad condominium loans, particularly in Miami, where it has six loans that are at least 90 days late, with a total balance of $314 million.

Corus said its overall loans that are at least 90 days late have nearly doubled to $830 million as of June 30, compared with $420 million at the end of March, according to a quarterly report filed with the Securities and Exchange Commission.

Corus said it has seven condominium loans with a balance of $453 million outstanding in New York City. The bank has one loan in New York that is 90 days late, with a balance of $14.3 million. Corus did not specify the project, but sources said that it is Caton on the Park.

The Chicago-based lender reported a loss of $16.2 million, or 30 cents, in the second-quarter, its first-ever quarterly loss. That compared with earnings of $42.4 million, or 74 cents, a year ago.
 
State Supreme Court Judge James Starkey is scheduled to hear the case on Aug. 6 in a Brooklyn courtroom.

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