The developers of the Cooper Square Hotel have handed the property over to mezzanine lender Westport Capital Partners as part of an “amicable” loan restructuring deal reached late last year, managing partner Klaus Ortlieb said.

The striking, 21-story East Village hotel, which was built around an old tenement building at 27 Cooper Square, debuted in late 2008 after years of delays. But it wasn’t long before the owners ran into financial trouble, and the following December, commercial lender WestLB filed to foreclose on $52 million in loans backed by the 145-room hotel. Restructuring talks had been ongoing since then.

Late last year, rumors had surfaced that the owners of the Soho Grand and Tribeca Grand hotels were “very close” to purchasing the Cooper Square Hotel outright, but were later squelched by Ortlieb and his team, who released a statement at the time asserting that the hotel would not be purchased by an outside party. [more]

127 Madison Avenue

Reflecting signs of a turbulent market, property fund Cardinal Real Estate Investments will hold a one-day auction in June for the six remaining units in its nine-apartment building at 127 Madison Avenue, called M127, the New York Times reported. “There’s going to be some discount for this transpiring in an auction format,” said Kyle Ransford, a founder of Cardinal Investments. “But the upside for us is that it happens quickly.” Open houses will be held starting Memorial Day. On June 27, the rest of the apartments will be auctioned off at the Roosevelt Hotel, in an event organized by Paramount Realty USA. There is no minimum bid for the two-bedroom units, some of which have been listed for as much as $1.9 million, but there is a “suggested opening bid” of $599,000. In February of last year, The Real Deal reported that Cardinal Investments had been renting out unsold apartments in the M127, and in one of its other buildings on the Lower East Side. [NYT]

[more]

A German bank claims the developers of the year-old, sleek, 21-story Cooper Square Hotel in the East Village are in default on $52 million in loans, at the same time the building owes millions to contractors.

Not only is the project in financial distress, but developers and investors in the 145-room hotel at 25 Cooper Square at East 5th Street could owe as much as $6 million in personal guarantees, the recent lawsuit says.

Commercial lender WestLB filed to foreclose on $52 million in loans given to Cooper Square Hotel, Cooper Square Mezz Lender and seven individuals including the hotel’s co-developer Matthew Moss and real estate investor Kyle Ransford, a lawsuit filed Dec. 14 in New York State Supreme Court says.

In addition, at least 20 contractors have filed mechanic’s liens totaling $9.9 million on the project between June 2009 and Dec. 18, records from the New York County Clerk show. The largest single lien, for $5.8 million, was filed by contractor F.J. Sciame Construction on Aug. 21, the records show.

Moss, Ransford and investor Gregory Peck are in default on a completion guarantee, and collectively owe up to $6 million, in part because of the unpaid liens, the suit says. [more]

From left to right: Kent Swig, Yair Levy, Harry Macklowe and Aby Rosen could be personally liable to lenders.

From the November issue: Contrary to popular belief, commercial lenders did not throw out all of their standards in the recent cycle of easy credit.
When developer Aby Rosen structured his $133 million loan for the
acquisition and development of the Shangri-La hotel at 614 Lexington
Avenue in April 2007, the mortgage document included a personal
guaranty to cover losses in the event of a default. Similarly, when Kent Swig negotiated $49 million in loans with
Lehman Brothers Holdings to develop a hotel and condo project at 45
Broad Street in the Financial District in 2006 and 2007, the bank
demanded a similar guaranty in the mortgage documents.
And other big-time borrowers such as developer Yair Levy and
investor Steven Elghanayan have made the same types of commitments to
convince banks to make loans on their projects. [more]

Troubled Midtown-based commercial lender CIT Group is seeking to foreclose on a $12 million loan made to a developer that has been successful in Manhattan but recently came up short with a luxury Noho condominium conversion at 654 Broadway. CIT claims developers 654 Broadway Partners LLC, an affiliate of Cardinal Real Estate Investments, has missed a total of $890,603 in mortgage payments since November 2008 in the two-year loan that was due in August and is now in default, a complaint filed in New York State Supreme Court Sept. 9 shows. [more]