The Real Deal New York

Two Midtown office towers facing foreclosure

Owners allegedly failed to make payment on loan backed by Diamond District property

September 28, 2012 06:00PM
By David Jones

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From left: 2 West 46th Street and 363 Lexington Avenue (buildings credit: PropertyShark)

Two Class B office towers in Midtown are facing foreclosure after the owners, led by the Manhattan-based Triangle Assets, allegedly defaulted on one of the buildings — a mixed-use commercial building in the Diamond District. The property had been on the market since 2011.

The owners, who include Joseph Stavrach, president and chief executive of Triangle, and Freddy Srour, of Atlas Ventures (who is also known as Faraj Srour), have allegedly failed to make payments since December 2011 on the loan backed by 2 West 46th Street. The balance of the loan is $51.9 million, which includes $46 million in principal, plus default interest and other charges.

The loan, which originated from Deutsche Bank, was part of a securitized pool of loans that was sold and cross-collateralized with a second loan for $60 million at 363 Lexington Avenue, the second property facing foreclosure. That loan now has a balance of $76.7 million, including interest and other charges.

Court documents show that the Miami Beach-based LNR is the special servicer of the loans and Midland Loan Services is the master servicer.

The 17-story tower at 46th Street, which included 115,000 square feet of office space and 17,000 square feet of retail space, had been on the market for as much as $83 million through Eastern Consolidated. Officials at the brokerage previously told The Real Deal that they were in talks with potential buyers, but it is not clear why a deal did not take place.

According to analysts, the property was 93 percent occupied, and leased by 106 different tenants — mostly jewelry design and retail. There is also a recording studio in the penthouse. The building generated $2.87 million in net operating income, according to servicer reports obtained by The Real Deal.

The city Department of Buildings has a partial stop work order at the site, due to the installation of awnings and signs without permits and the failure to adhere to approved plans, in connection with a glass partition at a retail store on the site, according to a DOB spokesperson.

The second property, at 363 Lexington Avenue, is a fully occupied 28-story tower with 108,000 square feet of office space and 20,000 square feet of retail on the corner of East 41st Street. That property has an unpaid balance of $76.7 million, which includes $59.9 million in principal, plus interest and other charges.

Propertyshark.com records show that the building’s prior owner Harry Macklowe is still listed on some records, but it is unclear whether he still retains some stake in the building. He declined comment through a spokesperson.

Court documents and Propertyshark.com also shows a lien from Jones Lang LaSalle for more than $112,000.

The lenders have asked for a court appointed receiver, and analysts say the borrowers have been making partial payments to the lenders.

Stavrach declined comment, except to tell The Real Deal that “we’re working it out with the bank.” Srour was not immediately available for comment. The law firm Venable LLP, which is representing the lenders, did not return calls. Eastern Consolidated officials were not immediately available for comment.

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