The Real Deal New York

Boymelgreen RKO Keith’s note to sell for less than $20M

October 26, 2009 12:21PM
By Adam Pincus

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A Midtown-based real estate investment firm is in negotiations to take
control of the troubled RKO Keith’s Flushing Theater from Boymelgreen
Developers by the end of the year.

Venator Capital has agreed to purchase a $20 million note secured by
the Flushing, Queens, property located at 135-27 Northern Boulevard from
Doral Bank, said Sam Suzuki, a principal with Venator, ultimately giving the company full control of the theater.

Investors affiliated with Venator are active in the Bronx as well, where they are in contract to buy 16 mostly rent-regulated apartment buildings owned by Ocelot Properties, after buying six earlier this year.

The RKO Keith’s note purchase would be followed by a so-called friendly foreclosure in which Boymelgreen would sign over the deed to the new owner without a protracted court proceeding, Suzuki said.

“We have an agreement for the note and we just have to get certain due diligence done by the end of the year,” Suzuki said. The agreement was signed last week.

The note would be sold at a discount, but Suzuki would not disclose the price.

A senior vice president at Doral Bank, Kenneth DiGregorio, confirmed that negotiations were underway for the security, but he, too, would not disclose the price. An executive with Boymelgreen did not immediately respond to a request for comment.

The Bronx and Queens agreements are examples of long-awaited distressed sales being negotiated in New York City. Such sales have only trickled into the market despite sharp drops in property values.

Boymelgreen has been trying to sell RKO Keith’s since a dispute with local Community Board 7 in 2007 prevented it from altering approved plans. In the spring of 2008, commercial sales firm Massey Knakal Realty Services listed the parcel for $31.5 million. After not selling, Boymelgreen gave the exclusive to brokerage RE/MAX, which had it listed for $24 million.

Boymelgreen bought the property in 2002 from notorious developer Tommy Huang for $15 million, but by 2008 had borrowed $20 million against the property.

Plans approved by the city allow for the development of 200 residential units, 10,000 square feet of retail and 12,500 square feet of community facility space as well as 229 parking spots, city records show.

Venator plans to partner with a developer to build the project, but would not discuss what would be built or specific numbers of units or square feet.

“I can’t say anything until I get possession,” Suzuki said.

In the Bronx, an entity called BXP 2, an affiliate of Hunter Property Management, a company owned by Venator, is in contract to buy 16 buildings that were part of the 24-building portfolio owned by Ocelot.

That sale is pending approval by Fannie Mae, the mortgage giant that holds mortgages on the 16 properties, Suzuki said.

A Hunter Property entity called BXP 1 paid $13.54 million for six Ocelot properties in May, including 1268 Stratford Avenue, city records show.

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