The Real Deal New York

Mark hotel developers hit with $21.1M suit

March 30, 2011 05:31PM
By David Jones

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From left: Simon Elias, the Mark hotel, Izak Senbahar

Fillmore Capital Partners filed a $21.1 million suit against Mark hotel developers Simon Elias and Izak
Senbahar of the Alexico Group, alleging the two defaulted on a mezzanine loan at the Upper East Side
hotel.

The suit, filed Monday in New York State Supreme Court, claims the two developers guaranteed
repayment of a $25.8 million mezzanine loan from Dublin, Ireland-based Anglo Irish Bank in 2006, and
acquired by San Francisco-based Fillmore in May 2007.

The loan, amended in December 2007, allowed the developers to borrow up to $43.28 million and some
of the funds advanced towards the project, leaving a balance of $38.5 million, as of April 2009. Fillmore
says the borrowers waived their rights to make any claims against the lender, and agreed to guarantee
the lesser of $7.75 million or the unpaid balance of the loan.

Fillmore says the loan came due in December 2009, and a default notice was sent in February 2010,
but the loan was not repaid. A demand for payment was sent earlier this month, on March 10. The
total amount due is the premium balance of $7.75 million plus $3.3 million in guaranteed interest, $8.3
million in default interest and a late payment premium of $1.7 million.

The mezzanine loan default is just one of several problems at the Mark Hotel, located at 25 East 77th
Street. Anglo Irish Bank put the loans for the Mark and two other Alexico hotels up for sale in the spring
of 2010 for more than $350 million.

After opening in January 2010, at least four buyers filed suit against Alexico to back out of their
contracts at the hotel. The developers had originally planned to sell 42 residences, but were forced to
scale that back
to 10 due to a lack of demand.

By August 2010, Alexico had entered talks with Dune Real Estate on a deal to restructure the debt
and later entered talks with Goldman Sachs on a deal to rescue the project.

The developers filed a $1 billion lawsuit against Anglo Irish Bank earlier this year, alleging the lender sold
the loans at the Alex, at 205 East 45th Street, and the Flatotel, at 135 West 52nd Street, to a competing
development firm, which Alexico called a breach of contract. Anglo Irish denied the allegations in court
documents and earlier this month filed a motion to dismiss the charges, according to attorney Aaron
Rubinstein, a partner in the litigation department at Kaye Scholer, who represents Anglo Irish.

Earlier this month, Dune agreed to pay $190 million for the Mark Hotel’s mortgage, which had a face value of about $300 million.

A court hearing on the Fillmore case is scheduled for May 3 in Manhattan Supreme Court.

Officials from Alexico and Fillmore were not immediately available for comment.

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