Istar sues UWS building owner for $53M

Lender seeks to foreclose at Mendel Mendlowits' West 92nd Street rental
By David Jones | January 21, 2010 11:02AM

201 West 92nd Street (source: PropertyShark)

The investor who acquired Kent Swig’s failed Upper West Side condominium conversion site spanning 92nd to 93rd streets in 2008, is now facing a $53 million lawsuit by Istar Financial to foreclose on the property and place the buildings into receivership.

Mendel Mendlowits, whose family owns the famed Adorama camera retail store at 42 West 18th Street, was accused of defaulting on the mortgage loan at 201 West 92nd Street, failing to pay thousands of dollars in taxes and allegedly signing an unapproved lease with a retail tenant.

According to the lawsuit, filed Jan. 14 in New York State Supreme Court, Mendlowits failed to pay Istar’s $46 million mortgage loan when it came due July 1, 2009. By Sept. 1, 2009, Istar says it notified Mendlowits that he also owed $329,950 in delinquent taxes and claimed that a June 19, 2009 lease with Playground Pups was signed without the prior consent of the lender.

Playground Pups owner Gail Nord angrily denied the allegations to The Real Deal, and said the bank would have to pay for her attorney’s costs if she had to hire one.

“I don’t even know who their lender is,” she said in a telephone interview. “I went into a lease agreement with the landlord. Anything else has nothing to do with me.”

The pet store is one of several retail tenants at the building, however her lease was the only one mentioned in the suit.

Mendlowits said he would return the call with a comment, but did not respond by press time. Neither Istar officials, nor the bank’s attorney Matthew Parrott, was immediately available for comment.

As The Real Deal previously reported, the Mendlowits family acquired the two rental buildings at 201 West 92nd Street and 200 West 93rd Street after developer Kent Swig was sued for defaulting on his original mortgage loan in 2008. Swig, Yair Levy and Charles Dayan originally acquired the 134-unit tenement complex in 2005, with controversial plans to build 56 condo units on top of the two existing six story buildings. The Department of Buildings initially approved the plan, but later put the plan on hold amid fierce opposition from tenants and neighborhood politicians.

Swig, president of New York-based Swig Equities, put the building up for sale in early 2007, hoping to get $90 million, but later dropped the asking price to $72 million and sold the project for $61 million in June 2008, about six months after Istar filed to foreclose on the property. 

After the sale, Istar worked out a deal to cut the original loan balance from $52.5 million down to $46 million, however Mendlowits incurred interest, late fees and other charges, bringing his loan balance up to $53.5 million.

The lender is scheduled to appear in court tomorrow to ask that the court appoint a receiver.

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