The Real Deal New York

LNR files to foreclose on Flatiron building

February 03, 2011 10:38AM
By Adam Pincus

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From left: 246 Fifth Avenue and an example of structural damage there (inset), and a vacant retail spot in the building

The owners of an over-leveraged and aging mixed-use building in the Flatiron District are in a rush to unload it as special servicer LNR Partners files to foreclose on the building’s defaulted $14.5 million loan and wipe out their equity, an industry source said.

The landlords of 246 Fifth Avenue, an L-shaped property on the southwest corner of 28th Street, bought it in July 2007 for $20 million, financed with a $14.5 million loan, city property records show. That loan went into default after the owners stopped making payments in March 2010, LNR’s lawsuit filed last month in New York State Supreme Court shows. Florida-based LNR is suing on behalf of investors in a package of commercial loans.

The property’s owners this past Friday hired David Schechtman, a senior director at Eastern Consolidated, to market the building. He declined to provide an asking price or additional comment. The owners and LNR did not immediately respond to requests for comment.

LNR has taken a more aggressive stance in New York City in recent months. Late last month, it filed to foreclose on Larry Silverstein’s 575 Lexington Avenue, which has $325 million in outstanding loans. In addition, LNR has pending foreclosures on two packages in the Bronx including the 10-building Milbank portfolio and Fordham Towers and Robert Fulton Terrace.

The approximately 90-year-old, six-story building has about 28,000 square feet of office space and 4,000 square feet of retail space, data from PropertyShark.com shows. Most of the retail is vacant, a recent visit to the property shows.

Owners Ronald and Hanna Goldberg, through their Argus Realty 246 LLC, intended to upgrade the building and lease to higher-paying tenants, but that plan stalled as the economy soured, the source said.

LNR has sold 10 properties nationally in the last 60 days for a total of at least $65 million, data from Real Capital Analytics show, compared with just one property worth $5 million in the same period last year.

LNR claims in its foreclosure lawsuit filed Dec. 22 that Argus and the Goldbergs have not made a single payment since March 2010, and areas such as the masonry facade, roof and heating and cooling system were in bad shape.

“[The owners have] caused the mortgaged premises to be in poor condition with numerous areas of deferred maintenance,” the suit says.

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