Jeremias faces foreclosure suit in $48M office tower default
October 26, 2009 06:45PM By David Jones
216 West 18th Street
Embattled developer Harry Jeremias is facing a new round of litigation for allegedly defaulting on $48 million in loans from Bank of America, used to purchase and renovate a 13-story office tower at 216 West 18th Street.
Jeremias, founder of the Harch Group, allegedly defaulted on the loans after the project encountered months of construction delays, multiple stop-work orders from the Department of Buildings and deteriorating safety conditions at the site, according to documents filed Oct. 22 in New York State Supreme Court.
Mortgage Electronic Registration Systems, a firm that services the loan on behalf of Bank of America, is asking for a court-appointed receiver, and warning that the building could lose its existing base of tenants without "competent" supervision of the project.
"Unfortunately, within the last year, construction at the building has stalled, and the building's marketability has declined," according to an affidavit submitted by Newmark Knight Frank broker David Falk, who was hired by Jeremias to market the building. "With construction stalled, it became increasingly difficult to convince businesses to consider the building and now it is nearly impossible."
The lawsuit notes that besides the stop work orders, the building has an incomplete roof, a mold problem from water leaking into the site and two tenants that are threatening to walk away from their leases if they cannot move in.
Company 3, a video production firm at 535 Fifth Avenue, signed a 10-year lease for three floors in the building in November 2007. The company deposited a $752,000 letter of credit and has spent more than $4 million to build out its space, according to an affidavit filed by Raymond Horn, its vice president of real estate. The space was supposed to be ready by July 2008, however due to extensive construction delays, the firm had to spend an additional $1.1 million in holdover rent, after the lease at its existing Midtown offices expired.
In June 2008, SYPartners, a San Francisco-based consulting firm, signed an eight-year lease for one floor in the building and has spent about $900,000 to build out its space, according to an affidavit by Susan Schuman, chief executive of the firm. SYPartners was scheduled to move into the new space in July 2009.
Jeremias, also a partner at PHH Realty, originally acquired the building for $50 million in April 2007, according to city Department of Finance records.
Court papers show that Jeremias has 15 outstanding judgments from the city's Environmental Control Board and five mechanics liens totaling $507,000.
In the court filing, Falk added that businesses are also reluctant to sign new leases because of Jeremias's current legal issues involving two residential projects. As The Real Deal previously reported, Jeremias is facing foreclosure at the Jasper, his condominium project at 114 East 32nd Street.
In August, U.S. Bank National Association, filed suit against Jeremias and his two business partners, Henry Orlinsky and Francisco Pujol Meneses, for a judgment after they allegedly defaulted on $31.4 million in personal guarantees related to the Renwick, a luxury condo project at 23-29 Renwick Street.
Jeremias was not immediately available for comment. MERS officials were not immediately available for comment and the attorney for MERS declined to comment.
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Comments
Anonymous
inevitable.
Comment #1 Posted By: Anonymous 10/26/09
Anonymous
what a mess. development isn't childs play
the building is now screwed, I say it has a rental value of 25PSF, far less than the conservative 50 they were shooting for....
Comment #2 Posted By: Anonymous 10/27/09
Anonymous
Harry is a nice guy, probably too smart for his own good. He bought at the height of the market and the numbers are not attainable now. Among a number of issues is that he asked for advice from commercial brokers who don't know the neighborhood. His commercial building on 18th street suffers because there is not a lot of commercial office tenancy in the area.
Comment #3 Posted By: Anonymous 10/27/09
Anonymous
Do you know the numbers that were offered on this property on the flip? should have taken it and ran.
Comment #4 Posted By: Anonymous 10/27/09
Anonymous
Why would this developers own broker sign affidavids. Against his own client??? Welcome to NY brokering backstabing
Comment #5 Posted By: Anonymous 10/27/09
Anonymous
latest member of the "buy high sell low" club
Comment #6 Posted By: Anonymous 10/27/09
Anonymous
i know harry personally and the man does not deserve this he has only good intentions. good luck!!!
Comment #7 Posted By: Anonymous 10/27/09
Anonymous
Harry is the sweetest guy in the world. I have been in commercial real estate for the past 8 years and the fact that the bank lent the funds based on whatever underwriting they used back then in the market boom cant be held responsible for the banks blunder. If the market would not have collapsed everyone would be making their profits and no one would have any complaints. Harry is a great businessman and a great visionary. He is no different than any other big name developers that have felt the brunt of the real estate collapse. He is honest and straight up and the bank should try to do a work-out with him. If you want to see a bigger travesty transpiring in this marketplace, take a look at the Stuyvesant Town, Peter Cooper Village deal where the "institutional owners" have raised rents illegally while getting huge tax breaks after heavily overpaying and overlevraging their $5.4 billion purchase at the height of the market. Good Luck Harry
Comment #8 Posted By: Anonymous 10/27/09
Anonymous
Developers like jermias must have gotten greedy, but banks were even greedier! Bank of america is definitely not one to feel sorry for as they stole $65 billion in tax payer funds! So no need to feel bad for any of them! I happen to have met jermias at a real estate function a year or 2 ago a class act of a guy, for a developer in his late 20's to have gotten hundreds of millions in loans & develop as many deals at that young age is damn impressive!
Comment #9 Posted By: Anonymous 10/27/09
Anonymous
Super nice guy - best of luck Harry. Wishing you only the best.
Comment #10 Posted By: Anonymous 10/27/09
Anonymous
screw the banks, Harry fight till the end
Comment #11 Posted By: Anonymous 10/27/09
Anonymous
Good luck harry. T
Comment #12 Posted By: Anonymous 10/27/09
Anonymous
Good luck harry. T
Comment #13 Posted By: Anonymous 10/27/09
ny resident
Is this a harry jermias fan club? Why is everyone so sympathetic to this guy? All these developers tried making too much money so it blew up on them..are we suppose to feel bad for them?
Comment #14 Posted By: ny resident 10/27/09
blogger
Last post ; you are right in a sense, but all these articles have posts below it and if not here there are real estate blogs elsewhere, and you get a sense of who the studs/duds in real estate industry are, so when you see all this support for this guy it obviously makes a statement to character of the developer, it seems Harry Jeremias is a popular young man in the industry and people are rooting for the guy, so we hope he prevails and works out a peaceful resolution
Comment #15 Posted By: blogger 10/27/09
Anonymous
Sounds like ny resident is a disgruntled tenant in a stabilized aprtmnt and has agenda against all developers. Memo to you haters! There are some good ones out there too, it sure seems jermias is one of them from this blog
Comment #16 Posted By: Anonymous 10/27/09
Elliman Broker
Yes indeed Harry is a good man. My firm had sold lots of units in his other project Jasper & all our buyers got their deposits back on time as promised, although we are all upset about lost commissions but hey this is nature of this business, anyone know where that project is up to? Is it going condo/hotel? Keep the positive stuff going
Comment #17 Posted By: Elliman Broker 10/27/09
blogger
Last I heard this fund from europe never showed up with cash (NY Times article) to convert to hotel, rumors are that he's shopping deal to funds for joint venture.
Comment #18 Posted By: blogger 10/27/09
ny resident
Hey Blogger! I'm not disgruntled nor any of that stuff. I'm just glad to see these developers suffer from their greed!!! So why is everybody care of this developer? They all are arogant
Comment #19 Posted By: ny resident 10/27/09
Anonymous
well it sure as hell ain't the BOA's fan club so let's take Harry's side
Comment #20 Posted By: Anonymous 10/27/09
Anonymous
hey NY resident go 2 bed
Comment #21 Posted By: Anonymous 10/27/09
Anonymous
NY RESIDENT You don't belong here you should leave this forum, Harry Jeremias is a solid stand up guy who reached imense success at a young age and is well renowned in the real estate circles so regardless the outcome of this or other projects he will survive, unlike other developers bigger than him that have already folded, he's second generation real estate family that has been around for decades and has always been a winner,I did a deal with him way back in 2003 and I'm proud to know him and will tell him same next time I see him
Comment #22 Posted By: Anonymous 10/27/09
Anonymous
This sounds like too many of developors friends I'm sick of reading this. I'm sure BOA has a thing or 2 to say about this as well. Any bankers out there want to chime in here?
Comment #23 Posted By: Anonymous 10/27/09
Elliman Broker
Hey Anonymous. Last thing I consider myself is a friend of Mr Jeremias and if I saw the guy I would kick him in the ass, as myself and my team lost at least 5 deal comissions on jasper deals, but you can't deny the fact that he's an honorable real estate man and that's not an easy title to carry in NYC as its a nasty business, good night all sleepy time
Comment #24 Posted By: Elliman Broker 10/27/09
Anonymous
does anybody know if he had partners in this deal?
Comment #25 Posted By: Anonymous 10/27/09
Anonymous
Harry is a syndicator so I'm sure he had investors as all syndicator's do. His partners can't be too happy though but who knows ? At his young age I'm sure he will be around for a while, you don't get to borrow hundreds of millions from banks by being a loser, he does have a great reputation on the street also as we can see from this blog
Comment #26 Posted By: Anonymous 10/28/09
Anonymous
Rumor has it that he's got some of biggest diamond families money behind him out there, those diamond guys are known to be pretty darn loyal bunch
Comment #27 Posted By: Anonymous 10/28/09
Anonymous
damn this harry guy must be one lucky sob or one smart dude, at his young age to have accomplished so much and to have screwed up as well but everybody is backing him. good for him and good luck!
Comment #28 Posted By: Anonymous 10/28/09
Anonymous
A good lawyer will figure out a way to have MERS tossed from the case, as recently upheld by the Kansas Supreme Court. MERS is only a facilitator of note transfers and was found to have no standing in a foreclosure, since they were paid their fee to provide their service in slicing and dicing mortgages. The original noteholder also got paid when MERS did their service, so also has no standing. Current noteholder needs to prove it is in possession of the note....
Comment #29 Posted By: Anonymous 10/28/09
Anonymous
Stay strong my brother. This too will pass.
Comment #30 Posted By: Anonymous 10/28/09
Anonymous
Harry, Is this you posting all these comments?
Comment #31 Posted By: Anonymous 10/28/09
Anonymous
I buy it! - Joe Moinian
Comment #32 Posted By: Anonymous 10/28/09
Anonymous
Mr Moinian you are broke & losing most of your properties as it is!! So how are you planning to buy it? :) Why don't you focus on saving your own ass
Comment #33 Posted By: Anonymous 10/28/09
Anonymous
stop with all the hate.
Comment #34 Posted By: Anonymous 10/28/09
Anonymous
#35 must have ivy league education to come up with that.
Comment #35 Posted By: Anonymous 10/28/09
Anonymous
actually Yale
Comment #36 Posted By: Anonymous 10/28/09
Elliman Broker
can we keep this forum to real estate comments only please
Comment #37 Posted By: Elliman Broker 10/28/09
Banker
Hi All, wow what a live bunch of characters here :-) From what it seems most bankers are trying to work with the borrowers, and from BOA's filed docs it seems that lender is still in negotiations with borrower but is moving towards receivership so they are positioned stronger while negotiating a settlement, dangerous move though cause if they lose the opening round which is very likely due to being a vacant property, lender puts itself in a much weaker position and will be forced to liquidate loan at steep discount due to deteriating value of asset without tenancy in place, i am sure Jeremias and his legal team are well aware of this, so its interesting to see the outcome of the first round here.
Comment #38 Posted By: Banker 10/28/09
Anonymous
amazing tht BOA tough holding when they got 60 billion in gov money. I hope jeremias creams them
Comment #39 Posted By: Anonymous 10/28/09
Eli R.
I know herry very well since his teenage and I haven't hear from him since than. and I am not surprised of the positive work and the portfolio he build him self up. I am sure even if he starts from scratch he will be back, bigger and sooner. I think for the best interest of the bank they should compromise something, because they hill make from him more money in the further then what they will loose from him now. and the same think to anyone in contact with him. Eli R.
Comment #40 Posted By: Eli R. 10/29/09
Anonymous
#40 what portfolio might you be talking about? good guy or not, he has yet to have a succesful project!
Comment #41 Posted By: Anonymous 10/30/09
Anonymous
#41 you obviously dont know the guy, he owns and manages over a thousand apts in brooklyn & developed a few hundred homes in tri state area in his 20's his problem was he joined the city at its peak and got caught with hand in the cookie jar like rest of big name developers and real estate collapse.
Comment #42 Posted By: Anonymous 10/30/09
Anonymous
#42 the problem is he took too many cookies out of the jar at the same time and the big name developers had experience which he didn't.
Comment #43 Posted By: Anonymous 10/30/09
Anonymous
Harry: stay strong and well bigger and better then you have problems Harry Macklow, Kent Swig, Tishmen, Wachovia, Lehman, Joe Monian, a dime a dozen its not your fault the banks were greedy and sucked us all in ==== they will live and so will you Good luck brother
Comment #44 Posted By: Anonymous 10/31/09
Anonymous
#41 this sounds a lot like the Jeremias i know!!!!
Comment #45 Posted By: Anonymous 11/02/09