The foreclosure auction of a piece of defaulted mezzanine debt on the Flatiron District’s MAve Hotel at 62 Madison Avenue between 27th and 28th streets, was postponed today when the property’s developers filed for Chaper 11 bankruptcy, according to Crain’s.

Madison Hotel Owners, purportedly the public face of Joseph Ben Moha, the owner of Roxy Deli, and Benzion Suky, a principal at Livorno Properties, filed late last night, according to court documents. The developers have total liabilities of $9.3 million, the documents revealed. [more]

[Updated 3:17 p.m. with defaulted mezzanine debt auction date and marketing information] A state Supreme Court judge last week approved a foreclosure judgment against the MAve Hotel, a boutique property in the Flatiron District that was developed by Roxy Deli owner Joseph Ben Moha and Livorno Properties principal Ben Zion Suky. The defaulted mezzanine debt is scheduled for auction May 17 at 60 Centre Street. The collateral is being marketed through the New York office of London-based Savills plc, according to documents obtained by The Real Deal. Providence, R.I.-based Textron Financial, in the suit originally filed in 2010, says it made two loans valued at $16.5 million to finance the acquisition and renovate the property at 62 Madison Avenue and 27th Street. The developers defaulted on the loan after failing to make monthly payments in October and November 2009, forcing the lender to accelerate the loan and demand $17.1 million in a November 2009 letter.

The developers sought a $30 million loan to buy and renovate the former Madison Hotel, which they acquired for $32 million in 2008, into a modern 70-room hotel. [more]

A Livorno Properties Upper East Side condominium is facing a new foreclosure suit from a private investment firm, just months after unit owners forced the troubled building into receivership. The firm, Petermark II, filed suit in New York State Supreme Court Nov. 8 against developers Ben Zion Suky and Yossi Zaga, alleging they defaulted on a $2.5 million mortgage that they personally guaranteed at the Duplex, a 37-unit building at 215 East 81st Street on the Upper East Side. Petermark acquired the $2.5 million mortgage from investors Peter Stern and Mark Pnini, who originally made the loan to the developers in September 2009, but Suky and Zaga allegedly failed to repay the loan and the default was declared this past September. [more]

Clockwise from top left, a copy of the envelope containing reporter Adam Pincus’ hotel key for a one-night stay at 440 West 41st Street, and interior shots of his hotel room in the building (click image to see larger version)

A Hell’s Kitchen apartment hotel that developer Sam Chang sold earlier this month to Israeli investors is available for single-night stays despite claims by its owner that it would not rent units for less than 30 days at a time.
While the current interpretation of the law on overnight stays in apartment buildings is unclear, experts said in general the particular zoning for this building is not for overnight hotel use and could be construed as illegal.
This reporter spent last night in Metro Apartments, the 13-story building at 440 West 41st Street located between Ninth and 10th avenues, paying just under $200 for a clean, well-furnished room on the fourth floor, which included cable television and wireless internet access, with no room service available (click here to see the reporter’s hotel booking receipt for the one-night stay). Last week, co-owner Ben Suky, a managing member of Livorno Properties, told The Real Deal that he did not rent the units for less than 30 days, and planned to convert the apartment building into an extended-stay hotel. [more]

Hotel developer Sam Chang and 440 West 41st Street (building photo source: PropertyShark)

Hotel developer Sam Chang sold a 13-story Hell’s Kitchen building being operated quietly as a hotel to Israeli investors as part of a complex deal in which Hersha Hospitality Trust took title to a Chang hotel in Tribeca and wiped out nearly $20 million of his development loans.
Chang’s H Forty First Street LLC, sold the Hell’s Kitchen property at 440 West 41st Street for $17.5 million to a company owned by Israeli investors called US Suite on March 5, city property records published Monday show.
Although Chang sold the property March 5, he signed a sales contract Dec. 15 and ceded operations to US Suite on Dec. 22, when he signed over a net lease on the property, city records show. [more]

Over the past decade, a number of prominent Israeli investors have had their ups and downs investing in New York City real estate. Some of these investors who have experienced hardships include Yair Levy, Shaya Boymelgreen and Africa Israel Investments, controlled by Lev Leviev, the company which purchased the former New York Times Building in Times Square. While foreign investors with billions of dollars of capital sit on the sidelines, a few new Israeli investors are testing the Manhattan commercial real estate waters. With prices at record lows, these investors hope to capitalize on the record low prices of property in New York City. Later this month, Israeli company, IDB Holdings, controlled by Nochi Dankner, and partner Joseph Cayre plan to close on the purchase of the HSBC Bank Tower headquarters at 452 Fifth Avenue.

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