The Real Deal New York

Durst Fetner closes on foreclosed Herald Square parcel

December 27, 2010 07:17PM
By Adam Pincus


From left: 855 Sixth Avenue, 110 West 31st Street and 112 West 31st Street (last building credit: PropertyShark)
The development partnership Durst Fetner Residential took title to the mostly-vacant development parcel at 855 Sixth Avenue where real estate investors Yitzchak Tessler, Meyer Chetrit and Jacob Chetrit sought to build a 355,000-square-foot tower before the economic downturn disrupted their plans.

Durst Fetner, a partnership between the Durst Organization and Hal Fetner, acquired the seven-parcel site that according to PropertyShark.com has 378,370 square feet of development rights, after lender iStar Financial initiated foreclosure proceedings in November 2008 against property owner 855 Realty Owner, as well as Tessler and the Chetrits individually.

Durst Fetner now controls seven of eight parcels of the large site on the west side of Sixth Avenue between 31st and 32nd streets.

It was reported in July that Durst Fetner bought the note with a face value of $104 million for an undisclosed amount. The deed transfer occurred Dec. 21, according to city property records published last Friday. A spokesperson for Durst Fetner said no one was available today to comment on the title transfer. Tessler Development was not immediately available for comment and an attorney representing Tessler and the Chetrits did not respond to a request for comment.

The parcel has been the subject of complex litigation going back at least four years, court records show. And the large site is between two newly constructed high-rises on Sixth Avenue that are part of a transformation of the area immediately south of Herald Square. The two projects are a 54-story tower that includes the residential Beatrice as well as the Eventi hotel on 29th Street; and a 47-story mixed-use building at 885 Sixth Avenue.

The litigation began after owner and developer Baruch Singer and a group of real estate investors bought six of the seven parcels on the site for $117 million in February 2006, from two different owners. Almost immediately, several investors who claimed they had agreed to partner with Singer and others to buy the site, accused him and his other partners in an April 2006 lawsuit filed in New York State Supreme Court of improperly shutting them out of an opportunity to buy the property. The case in ongoing, court records show. (Note: correction appended).

Just over a year later, in March 2007, Singer’s group sold the assembled plot to Tessler and the Chetrits for $140 million, city records show. At the same time, to enlarge the footprint and bulk of the development, Tessler Development signed a contract to buy 112 West 31st Street and in October 2007 a contract to buy 110 West 31st Street, from separate owners.

In January 2008, Tessler and partners closed on the acquisition of 112 West 31st Street for $12.3 million. However, Tessler and the Chetrits never closed on the purchase of 110 West 31st Street, a narrow 25-foot wide, four-story commercial building. Both buildings remain standing today.

In January 2010, Tessler and the Chetrits brought a lawsuit in Manhattan against the Brooklyn-based owner of 110 West 31st Street, identified as 110 West 31st Street Realty. They claimed the owner defaulted on the purchase contract, and they wanted their $400,000 down payment back. It was unclear what the result of the suit was. There are no city property records indicating a sale, and there was no answer at the phone number listed for the owner in city records.

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