The Real Deal New York

Magic Johnson-financed rental building sells for $58M in bankruptcy

December 17, 2010 03:40PM
By Adam Pincus

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Magic Johnson and the Viridian building at 110-130 Green Street in Greenpoint

A high-end residential development in Greenpoint that was funded in part by basketball great Magic
Johnson and that failed as a condominium but survived as a rental was sold in bankruptcy for $58.2
million.


Brooklyn investors Chaim Gross, Martin Friedman and Joseph Brunner signed a purchase agreement for
the 130-unit property known as Viridian, at 110-130 Green Street between Franklin Street and Manhattan Avenue, Dec. 1,
Brooklyn bankruptcy court records from the Eastern District show. The sale closed Dec. 13, said attorney
Kevin Nash, who represented the project’s developer, Joel Schwartz.


The bankrupt seller known as 110 Green St. Development, a company headed by developer Schwartz,
filed for chapter 11 bankruptcy in February 2009, citing an inability to sell the condos. Sales began
in June 2008, but never caught on. 


Seeing the weak sales market, the developer switched gears from condos to rentals, the 2009
bankruptcy filing says.


Tenants have been living in the six-story building, which includes a pool, sauna and gym, for about two
years. It received its certificate of occupancy in January 2009, city Department of Buildings records
show.


At the time of the bankruptcy filing, the Bank of New York held the senior mortgage of $35.75 million,
and a fund controlled by Canyon-Johnson Urban Funds held a mezzanine loan valued at $12.4 million,
court records show. Earvin Johnson’s Johnson Enterprises and Canyon Capital Realty Advisors created
Canyon-Johnson as a joint venture real estate fund.


Attorneys representing the bank and mezzanine lender did not respond to requests for comment. 
Gross could not immediately be reached for comment. The buyers’ attorney Stephen Friedman, of Smith, Gambrell & Russell, declined to comment, saying: “Have a wonderful weekend.”


In the bankruptcy sale, the buyers paid Bank of New York about $33.5 million while Canyon-Johnson
was paid $20.2 million, which was comprised of the original loan plus interest and penalties. In addition,
a group of unsecured creditors such as contractors were paid 25 percent of the amounts they were
owned, bankruptcy records show.


Streeteasy.com shows rentals being offered for between $2,200 per month for a one-bedroom to
$3,450 for a two-bedroom.


The developer filed for bankruptcy to protect the building from the mezzanine lender Canyon-Johnson,
because it feared Canyon Capital might pursue a “loan to own” strategy and take control of the building,
the chapter 11 filing says.


Nash told
The Real Deal, that it became a personal challenge for Schwartz to hold on to the property and
pay off the lenders. 


“It was a good story,” he said. “It became a test of wills. [The mezzanine lender] said we could not do it.
But we did.”

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