Rosen faces foreclosure suit at hotel site

New York /
Jun.June 19, 2009 04:37 PM

The lenders for the Midtown development where Aby Rosen’s RFR Holding was slated to build Shangri-La Hotel, New York, have filed to foreclose on $144.2 million in loans and fees used to buy, plan and develop the site, court records say.

ING Real Estate Finance and Swedbank sued to foreclose on the loan to Park Avenue Hotel Acquisition, a company registered at the address of developer Aby Rosen’s RFR Holding, which was slated to develop the Shangri-La Hotels and Resorts’ tower at 610 Lexington Avenue, at 53rd Street.

The borrower was unable to refinance its loan by an April 8 deadline, and so ING determined the loan was in default on June 15, the filing says.

Crain’s reported
in April that Shangri-La had pulled out of the New York project, where the hotel and RFR Holding planned to build a 64-story hotel tower with residential condominiums on the top 10 floors, next to the landmarked Seagram Building at 375 Park Avenue at 53rd Street. Shangri-La was to manage the hotel under a 2007 development and operating agreement signed with RFR Holding.

The default could be costly for Rosen, his RFR partner Michael Fuchs and Shangri-La Asia Limited, all of whom are named in recourse carve-out provisions as guarantors, the court papers filed June 16 in State Supreme Court say.

RFR Holding, Shangri-La and ING did not respond to requests for comment.

RFR Holding owns significant properties in New York City such as Lever House and the Seagram Building. Although considered a stable company, a loan to an RFR Holding-affiliated entity that owns a retail condo at 60 East 55th Street, was listed as delinquent in May, according to loan tracking firm Trepp.

The original $145 million loan issued by Lehman Brothers Holdings in April 2007 to the RFR affiliate was composed of a $98.64 million acquisition loan; a project loan of $19.3 million for pre-developments costs; and a building loan of $27 million to fund demolition and construction costs, the court filing says.

The note had an original repayment date of October 8, 2008, with an option to extend to April 8.

That loan was transferred in stages from Lehman Brothers and related entities to ING Real Estate Finance, a division of the Dutch ING Group; and the Swedish Swedbank, in a shift that was completed by November 2008.

David Arena, president of Grubb & Ellis New York, who was not involved in the property, said falling property values would bring more defaults of this type.

“It is all maturity default risk. The loans are going to come due, and values will be way below what the current owner is in for, and the buildings are going to go back to the banks and financial service companies,” he said.


Related Articles

arrow_forward_ios
The Gramercy Park Hotel at  2 Lexington Avenue and Aby Rosen of RFR Holding (Getty; Google Maps)
Aby Rosen’s Gramercy Park Hotel faces eviction
Aby Rosen’s Gramercy Park Hotel faces eviction
RFR Holding's Aby Rosen with the Seagram Building and the Chrysler Building (Photos via Getty; iStock)
Aby Rosen says firms have been too “nice-nice” with employees
Aby Rosen says firms have been too “nice-nice” with employees
Vanke US managing director Kai-yan Lee, RFR’s Aby Rosen and 100 East 53rd Street (Photos via Foster + Partners and Getty)
Vanke seeks to remove RFR from Midtown condo project
Vanke seeks to remove RFR from Midtown condo project
100 East 53rd Street,  Vanke US managing director Kai-yan Lee, and RFR's Aby Rosen (Photos via Structure Tone and Getty)
Aby Rosen accuses Chinese partner of “power grab” after condo loan default
Aby Rosen accuses Chinese partner of “power grab” after condo loan default
From left: Michael Fuchs, Aby Rosen, Brandon Singer and Michael Cody (Getty, iStock)
Aby Rosen, Michael Fuchs back new retail brokerage
Aby Rosen, Michael Fuchs back new retail brokerage
522 Fifth Avenue and RFR Realty’s Aby Rosen (Credit: Getty Images; Google Maps)
Aby Rosen snags $224M loan for Midtown office building
Aby Rosen snags $224M loan for Midtown office building
RFR Realty's Aby Rosen and 522 Fifth Avenue (Getty; Google Maps)
Aby Rosen buys Midtown office building for $350M
Aby Rosen buys Midtown office building for $350M
 60 East 55th Street and RFR Realty's Aby Rosen (Getty Images, Google Maps)
RFR’s Core Club condo at Midtown tower heads to special servicing
RFR’s Core Club condo at Midtown tower heads to special servicing
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...