Bank of America filed to foreclose on two loans totaling more than $30 million provided for the development of a rental project dubbed the Oliver to be constructed by the luxury developer Alexico Group on the East Side.
The lawsuit describes one mortgage from 2007 as the fee acquisition loan, valued at $28.32 million, and the second as a development rights acquisition loan from 2008, valued at $2.3 million.
Both loans were originally due November 2008, but the maturity date was extended to May 1, 2009. The loans were not repaid by that time, and the bank notified the borrowers that the loans were in default, the suit filed in New York State Supreme Court August 13, says.
The loans cover five mid-block lots from 951 to 961 First Avenue, between 52nd and 53rd streets, although the planned 30-story development is only on the three northernmost lots totaling 75 feet by 100 feet, court papers and property records show. The other two lots are occupied by five-story apartment buildings.
The suit seeks a sale of all five parcels, and if that does not cover the costs of the loans, it seeks payment through guarantees from the investors, Alexico partners Izak Senbahar and Simon Elias, as well as project partner Steven Elghanayan.
Senbahar indicated in a statement to The Real Deal that his company was in negotiations with the lender.
“We have a good, long-standing relationship with Bank of America, and it will be resolved,” he said, but did not elaborate.
Bank of America declined to comment.
Companies affiliated with Alexico have owned four of the five lots since at least 2002, city property records show. The most recently acquired parcel, at 953 First Avenue, was purchased by the developer for $7.4 million in October 2007.
The Oliver, with an address of 959 First Avenue, is planned to be a 161-unit luxury apartment building with one-, two- and three-bedroom units, that would include the city’s first outdoor rooftop theater system, the developer’s Web site says.
Those plans are stalled, and currently a foundation has been built on the 75-foot by 100-foot site, while mechanic’s liens alleging unpaid contractor bills totaling $4 million dollars have been filed with the New York County Clerk, according to court records.
This is not the only troubled project for Alexico, which developed 165 Charles Street in the West Village and 353 Central Park West on the Upper West Side. The developers were sued for back rent for an off-site sales office for its project the Laurel, at 400 East 67th Street; and 56 Leonard Street in Tribeca was reported delayed in January.
Alan Miller, a sales broker and senior director with commercial investment firm Eastern Consolidated, who was not involved in the litigation or the development, said residential projects all over the city are facing financial problems.
“Another one bites the dust,” he quipped in an e-mail.
He expected that behind the scenes the bank was either trying to work out a loan extension with Alexico or was trying to sell the debt to a third party.
Attorney Stephen Meister, partner with Meister, Seelig & Fein, who is not involved with the case, said lenders in such a situation had limited options considering the poor economy.
“Bank of America is not likely to have an easy time marketing a development site in the current environment, should it be successful in this foreclosure action,” he said.