R Squared faces suit from iStar at 34 Leonard

By David Jones | June 12, 2009 05:47PM

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.

The suit also names Sandaro Realty, a Manhattan-based property owner that controls a land lease on the site. Sandaro officials declined to comment. R Squared officials were not immediately available for comment.

According to the lawsuit, at least three contractors have filed mechanic’s liens on the property since April, including Bay Crane Service, of Long Island City; Barker Steel, of Milford, Mass., and Daurio and Russo & Sons Construction of Brooklyn. 

The Marketing Directors was the residential broker for the building, where prices ranged from $1.98 million for a 1,591-square-foot one-bedroom to $8.45 million for a 5,300-square-foot penthouse apartment, according to Streeteasy.com.

In January, Ripco Real Estate was tapped to represent the building’s 4,100-square-foot retail space, located at 180 West Broadway, the building’s alternate address.

R Squared has developed several other projects in the area, including Adams Square, a 59-unit condo in Hoboken, N.J., Deegan Gateway, a warehouse and office building in the Bronx and Big Box Crossing, a 360,000-square-foot shopping mall in Commack, L.I.