A troubled 12-story commercial loft building Noho is scheduled for auction next month, after CW Capital foreclosed on the mortgage and sold the debt to Lincoln Property Co.
The new debt holder is scheduled to auction off the $71.3 million loan on Sept. 21, but would likely take control of the property unless a new bidder emerges at the sale. Lincoln acquired the loan in May, after CW foreclosed on the previous owners, Argo Corp.
According to the lawsuit filed in New York State Supreme Court, the borrowers defaulted on a $53 million securitized loan that was originally made in 2007 by J.P. Morgan Chase.
Argo, led by Mark Moscowitz, president and chief executive officer at Argo, acquired the building in 2007 from Kimco Realty Corp.
According to court documents, James Kuhn of Newmark Knight Frank, took over as temporary receiver at the property, at 625 Broadway and Houston Street, in 2009 and proceeded to find several new tenants.
The Mexican food chain Chipotle signed a new 2,800-square-foot retail lease, according to one published report, while court records show that Studio One Networks, a content marketing firm, signed an 8,000-square-foot lease over seven years and Targusinfo, an interactive data firm, signed another lease at the building over five years. Office rents at the building were $35 a square foot, court records show.
Lawyers for Argo have challenged the note of sale in court, saying the borrowers offered to buy the note for cash, and cited loan documents that would give the borrowers the first opportunity to buy the note. “Plaintiff never allowed defendant an opportunity to financially ‘beat’ the third-party offer but rather presented the agreement as a fait-accompli,” said attorney David Abramson, representing Argo, in court filings.
According to documents filed Aug. 10, lawyers for Argo filed an appeal against the loan sale, arguing that the new debt holders did not even have an active business in New York City, and that the entity that acquired the loan and became the new plaintiff, called 625 Broadway Venture, was not a registered New York state business at the time of the deal.
Analysts said the property could eventually be converted into condominiums after the current leases expire, as Lincoln Property has experience with commercial and residential properties.
Argo officials were not immediately available for comment, nor were officials at Lincoln Property. Argo lawyers were not immediately available.