A 16-unit luxury co-op building at 34 Leonard Street in Tribeca is hitting the auction block May 5, according to Crain’s, a year after developer R Squared defaulted on its $37.5 million mortgage and saw lender iStar Financial foreclose on the property. Although the property’s conversion to co-op was considered a success, the developers’ timing was off, placing the units on the market in fall 2007, just a short while before the recession hit. The R Squared development team has yet to comment on the auction proceedings.

R Squared Real Estate is facing a foreclosure suit from iStar Financial
for $37.5 million in loans for the conversion of 34 Leonard, a
loft-style co-op apartment and retail building in Tribeca, which
recently completed construction. Istar alleges in a May 26
suit filed in New York State Supreme Court that the borrower defaulted
on a $29.2 million building loan and an $8.3 million project loan to
convert the site into a 16-unit co-op with 4,100 square feet of retail
space. R Squared is a privately held real estate firm led by
Mitchell and Gregg Rechler, who are major retail and residential
developers, with offices in Manhattan and Melville, L.I. In
the lawsuit, iStar alleges that the borrowers defaulted on April 15,
with a balance of $32.3 million in principal, fees, interest and other
expenses. Istar officials were not immediately available for comment. [more]