Gluck faces $110M foreclosure at 2 Rector

Gluck and 2 Rector Street

Developer Laurence Gluck is facing a $110 million foreclosure suit at 2
Rector Street from Bank of America, about a year after losing one of
his largest tenants at the 27-story office building in the Financial
District.

Bank of America, in a July 1 lawsuit filed in New York State Supreme Court, alleges that it called in a default on Gluck in April 2010, after he failed to make required monthly payments at the building, which operates under the name Wall Street Plaza West.

Gluck, in February 2010,
notified the lender that he would no longer be able to make his
payments, citing the loss of a major tenant in June 2009. The suit did
not name the tenant that vacated the building, however Fitch Ratings
reported that the tenant leaving the space had 72,000 square feet, or
17 percent of the available space, which matches the description of the
city Department of Transportation’s office space.

The building, whose occupancy percentage dropped to 71 percent
in recent months, according to analysts, has a number of high-profile
tenants including Merrill Lynch and architect Daniel Libeskind.

Judge Melvin Schweitzer issued an order on July
2, appointing William Hoffman, president of San Diego-based Trigild, as
receiver of the property, with the authority to collect rents in the
building.

Gluck faces up to $5 million in personal liability if the property, which made Trepp’s top 10 delinquent loans list in April, is filed into voluntary bankruptcy.

Bank of America is the trustee of a pool of securitized loans that were
sold under the name Cobalt CMBS 2007-C3. Gluck, the president of
Stellar Management, entered a deal with Wachovia Bank in 2007 to
refinance the property for $110 million, and that loan emerged as the
biggest “loan of concern” in the pool, according to an August 2009
report by Fitch Ratings.

Manhattan-based SREF Holdings holds a B-note at the property for $10 million.

Gluck was not immediately available for comment.

Crowell Moring attorney Timothy Fierst, representing Bank of America,
declined to comment on the case, and bank officials were not
immediately available for comment.

Cushman & Wakefield lists about 98,400 square feet of space
available at the property, with rents ranging from $33 to $36 a square
foot.

Woody Heller, executive managing director at Studley, said that the
fate of 2 Rector Street is just another example of a highly leveraged
building getting caught in an economic downturn.

“This is nothing about Larry Gluck; this is about what’s happening in the market right now,” Heller said.