Lawsuit seeks sale of Shekhter-owned apartments in West LA after default

Neil Shekhter’s NMS Properties defaulted on a loan tied to three of the firm’s apartment complexes in West Los Angeles — and now the lender wants to sell the property through a receiver, according to a lawsuit filed late last month. 

Ladder Capital alleges an NMS-controlled entity defaulted on a $15 million loan last month, after breaching a number of covenants in the loan agreement, in a complaint filed with L.A. Superior Court. 

NMS Properties “failed to time pay” $225,000 into an interest rate reserve and entered new major leases with tenants without getting prior approval from the lender — both of which constituted an event of default, Ladder alleges. Shekhter, who did not respond to a request for comment, is not personally named in the lawsuit.

NMS has owned the properties, located at 1901 Overland Avenue, 10750 Missouri Avenue and 11665 Mayfield Avenue, since the early 2000s, according to property records. The firm bought the Overland and Missouri complexes for $3 million in 2004 and the Mayfield property for an undisclosed sum in 2006.

Ladder handed out the $15 million, floating-rate loan in 2021, when interest rates were at historical lows, according to a copy of the loan agreement attached to the complaint. 

Ladder did not say NMS had stopped making monthly payments or had been affected by rising rates — the biggest cause of distress for multifamily owners in the current market.

NMS agreed to buy an interest rate cap, preventing the interest rate from rising above 2 percent. The loan was set to mature in 2024. 

The landlord also failed to finish all renovation work prior to June 9 — a deadline outlined in the loan agreement. That constituted another event of default, Ladder said in its complaint.

The New York-based REIT is asking the court to appoint a receiver to take over the properties and help collect rents. The receiver will also be tasked with marketing the complexes for sale. 

Ladder is preparing to foreclose on the properties, it said in the complaint, and hopes to sell them swiftly after taking them over.

At the end of the second quarter, Ladder Capital reported about $89 million in non-accrual loans, meaning the borrower had stopped making payments, according to an SEC filing. In December, the REIT reported $53.8 million in non-accrual loans. 

The non-performing loans still make up a small part of Ladder Capital’s roughly $3.5 billion loan portfolio. 

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