The Real Deal New York

Receiver appointed at $84 million Midtown hotel and condo foreclosure

November 23, 2010 02:34PM
By David Jones

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PB Capital, the American subsidiary of Deutsche Postbank, was granted a receiver last month to oversee Sorrento New York, a stalled 43-story condominium and extended-stay hotel that is the subject of an $84 million foreclosure suit.

The Ismael Levya-designed tower, at 306 West 48th Street, was developed by Manhattan-based Esplanade Capital led by Jay Eisenstadt and David Scharf.

Investors Donald and Kevin O‘Sullivan were named as the guarantors of $84 million in loans for the newly constructed project, which was scheduled to include extended-stay housing under the BridgeStreet Worldwide hotel brand. They were not immediately available for comment.

According to the complaint, filed in September in New York State Supreme Court, the developers operated through a firm called Navillus Contracting, in Long Island City, Queens. The complaint says that the developers had a deal to sell the residential units in bulk to an Irish firm called Fuerta Property, a unit of Sorrento Asset Management, for about $17.8 million, which would then resell the units, leaving BridgeStreet to operate the extended stay hotel portion.

The complaint states that Fuerta backed out of the deal to buy the residential apartments, claiming the developers failed to close their first unit by July 21, 2009. By August 2009, the $84 million came due from the developer, and PB Capital called in a default.

Dozens of units had been sold to Irish investors for only $1,000 down for each unit, according to the complaint. Streeteasy.com shows that a portfolio of 45 units in the building was listed in August 2009 for $61 million by Brown Harris Stevens.

Streeteasy.com and city records show one recorded sale, a $610,000 apartment that was acquired by Eisenstadt, who signed the deed as the president of the building’s board of managers. Eisenstadt was not immediately available for comment.

By last month, a state Supreme Court judge named Yonkers-based attorney Gerald Kahn, of Smith, Buss and Jacobs, as the new receiver. Kahn was ordered to maintain the building and keep the lights on, but he was not allowed to sell or rent out any units.

“You will see that I am merely a caretaker,“ Kahn said. “I don’t have the ability to rent out any space. I have to maintain the building in its current condition.”

BridgeStreet officials and lawyers for PB Capital and the developers were not immediately available for comment. Peter Hannigan, managing director at PB Capital, and Scharf were also not immediately available for comment.

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