The Real Deal New York

Judge names receiver in 34 Leonard foreclosure case

September 04, 2009 04:48PM
By David Jones

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A New York State Supreme Court judge late last month ordered the appointment of veteran corporate attorney Stuart Shorenstein to take over as receiver of 34 Leonard, the troubled luxury co-op development in Tribeca.

Shorenstein, who recently joined the corporate law division at Cozen O’Connor, was ordered Aug. 27 to collect rents and complete construction of the property and named Cooper Square Realty as managing agent at the building. The order also named E.W. Howell, as general contractor of the project.

“The goal is to complete the [construction of] the building,” Shorenstein told The Real Deal, when asked about the fate of the project. “The second step is to complete the foreclosure action. Once that is done, we’ll be in a position to decide how to proceed.”

Shorenstein, a New York corporate attorney for 30 years, recently became one of 27 attorneys from Wolf Block to Cozen O’Connor, where he leads the government relations and communications practice.

He once led the transition team for then Attorney General-Elect Eliot Spitzer and has previously worked as a receiver.

The order follows a May lawsuit by Istar Financial, alleging that R Squared and Sandaro Realty defaulted on $37.5 million in loans to convert the property into a 16-unit residential co-op and retail site. According to the lawsuit, Istar and Sandaro defaulted on the loans in April, with a balance of $32.3 million.

Shorenstein said there were no units under contract at the time he took over, where asking prices ranged from $1.98 million for a 1,591-square-foot one-bedroom unit to $8.45 million for a 5,300-square-foot penthouse apartment. He said most of the external construction is done, and they are working on obtaining a certificate of occupancy.

“It’s a building without any current income,” he said. “The market aspects will certainly be challenging.”

In January, Ripco Real Estate was selected to find a tenant for the building’s 4,100-square-foot retail space. The Marketing Directors was the exclusive broker for the residential units.

Sandaro fought the receivership order, according to court filings, arguing that it was owed thousands of dollars of back rent by the developers, and actually filed suit to evict them. In addition, contractors have filed hundreds of thousands of dollars in mechanic’s liens against the property.

R Squared, led by developers Gregg and his cousin Mitchell Rechler, leased the land from Manhattan-based Sandaro, which controls a ground-lease on the property.

R Squared, based in Manhattan and Melville, N.Y., has several real estate projects in the area including Deegan Gateway, a loft building with 430,000 square feet of office and warehouse space at 385 Gerard Avenue in the South Bronx. In May, the firm named Newmark Knight Frank to lease the space at Deegan Garden. 

Neither Rechler was immediately available for comment nor was Sandaro’s attorney.

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