Lender U.S. Bank won a judgment for $17.2 million, in a decision published yesterday, against a developer that sought to build a Starwood Aloft hotel in Long Island City, but the project stalled and the site remains vacant.
In addition to the judgment on the loan, the decision awarded the bank $4.3 million in personal guarantees given by four individuals to secure the loan. The lender’s victory over the investors may portend further trouble for developers citywide who frequently provided millions of dollars in personal guarantees during the building boom to encourage lending, but who now are facing judgments by lenders seeking to collect on their promises to pay all or portions of loans.
The developer, Queens Plaza Development, filed plans to build a 16-story hotel at 29-37 41st Avenue in Queens Plaza near the Queensboro Bridge, Department of Buildings documents show. Last year, Starwood’s Web site identified the 249-room project as By the Bridge, with an opening date of Dec. 31, 2010, but that information is no longer available on the site. Starwood did not immediately respond to a request for comment.
Court papers say the Brooklyn-based development company took out $17.2 million in loans from U.S. Bank in April 2007, and individuals Ed Somekh and Yoram Shemesh, of the Yess Property Group development company; Moshe Feller of Brooklyn; and Isadore Mayrock of Uniondale, NY, provided personal guarantees of $4.3 million.
The loan went into default in October 2008, and the bank sued in April 2009 for the loan and the guarantee. The defendants said, according to court papers, that the bank should simply take the property back in a deed-in-lieu of foreclosure action, but the bank refused, instead pursuing the money directly instead of the property.
The decision, handed down Wednesday by New York State Supreme Court Justice Eileen Bransten and published yesterday, grants the bank’s motion seeking repayment of the loan as well as the payment of the personal guarantees, court papers say.
Queens Plaza Development and individual investors did not immediately respond to requests for comment. The attorney for U.S. Bank declined to comment.
Starwood Aloft hotels are scheduled to open July 1 in Brooklyn at 216 Duffield Street and in Harlem at 2300 Frederick Douglas Boulevard, the company Web site says.