Warehouse 11 relaunches sales as buyers granted right of rescission

By David Jones | June 04, 2010 07:15PM

Brooklyn condominium Warehouse 11 has resumed closings, but is offering buyers a chance to back out of contracts after the New York attorney general’s office determined that lead developer Isack Rosenberg failed to formally disclose several foreclosure suits and bankruptcy filings to buyers.

The developer and his brother, Abraham, each filed for Chapter 11 bankruptcy protection in July 2009 after lenders, including Capital One Bank and RCG Longview, filed separate suits to foreclose on the property, located at 214 North 11th Street in Williamsburg. Lenders previously retained Massey Knakal Realty Services to sell $50.7 million in senior notes at the property, but the developers argued that they had the legal right to match any third-party offer.

RCG, a mezzanine lender at the 120-unit Karl Fisher-designed Williamsburg building, was also scheduled to seize a valuable waterfront site that was recently rezoned for a planned 774-unit complex called Rose Plaza on the River, according to court documents and other sources.

Warehouse 11 officials confirmed that the rescission offer is included in a new amendment to the condo offering plan.

“The attorney general’s office had requested that the sponsor of Warehouse 11 amend the offering plan to outline the previous litigation, which has been settled for some time now, temporarily delaying closings at the building,” said David Maundrell, president of apartmentsandlofts.com, the exclusive broker for Warehouse 11, in an e-mailed statement issued Wednesday.

Maundrell said the amendment was approved and two closings were conducted yesterday.

Warehouse 11 officials signed contracts with about 60 buyers earlier this year as part of an effort to settle the dispute with lenders. The developers are listing units at prices well below rival Williamsburg properties, with average prices of $545 a square foot, according to Streeteasy.com.

As part of Rosenberg’s Chapter 11 reorganization plan, proceeds from closings at Warehouse 11 would be used to settle the loan balances. Multiple sources said that the settlement calls for lenders to be paid by the end of June.

Attorneys for the lenders, spokespeople at the attorney general’s office and Capital One officials were not immediately available for comment.

Sources familiar with the property say that a number of buyers have expressed concern about the new disclosures at Warehouse 11, but other buyers say they will move forward with closings and several have already moved into the building under interim lease agreements.

“I think the vast majority of people that I’ve talked to are comfortable with moving forward,” said Adam Gentle, a contracted buyer at Warehouse 11 who is not looking to back out of his contract. “You could have figured this out on your own if you were interested in doing so.”

“We do not anticipate that buyers will see the need to rescind their contracts as the final amendment was approved yesterday by the attorney general’s office, according to a statement e-mailed Wednesday by the building sponsors, McCaren Park Mews.