The Real Deal New York

Madison Square Park area hotel-condo hit with foreclosure

October 29, 2009 06:39PM
By David Jones

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Inland Mortgage Capital filed suit earlier this week to foreclose on a luxury hotel-condominium project near Madison Square Park.

The suit, filed in New York State Supreme Court, alleges the developers defaulted on $27.2 million, which includes $22.75 million in loans, plus interest and penalties.

The developer, 241 Fifth Avenue Hotel, led by investors Dan Shavolian and Jack Hazan, originally bought the building in 2007 for $26.5 million from Avraham Sibony, who had acquired the building, at 241 Fifth Avenue, between 27th and 28th streets, for $10.8 million in 2005.

Sibony had originally planned to build a 19-story luxury condo with 76 rooms, but flipped the building to Shavolian’s group after obtaining approvals from the city’s Landmarks Preservation Commission.

The new owner retained the original design plans, but changed the focus to a 100-room hotel-condo, according to published reports. The building was part of a wave of new development centered loosely around Madison Square Park during the city’s real estate boom.

The developer took out a $7 million mortgage in 2005 and a $15.9 million gap mortgage in 2007, which was later consolidated and restated into the aforementioned $22.75 million in loans.

That same year, Shavolian, Hazan, investor Al Cohen and Los Angeles real estate investor Ezri Namvar, entered agreements to guarantee the loan, according to the complaint.

Namvar, chairman of Namco Capital Group, allegedly stole hundreds of millions of dollars invested by the Persian Jewish community in Los Angeles, according to published reports, and the Inland Mortgage complaint notes that his creditors pushed him into involuntary Chapter 11 bankruptcy protection in December 2008.

The complaint noted that the bank reserves the right to ask that a receiver be appointed, but has not yet formally made such a request.

Shavolian declined to comment, except to confirm that the property is still an unfinished development site as it was when they completed the original deal.

Hazan was not immediately available for comment. Gillian Brown, an attorney for Namvar, was not immediately available for comment.

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