Alexico Group is facing a $196.7 million lawsuit at the Flatotel, after Atlas Capital accused the developer of defaulting on the property’s mortgage loans.
According to the suit, filed in New York State Supreme Court yesterday, Alexico borrowed $158 million from Anglo Irish Bank in January 2008 to develop the property, located at 135 West 52nd Street. But the developer allegedly failed to make three consecutive interest payments on the loan starting in January 2009 and was notified of the default in April 2009.
The complaint alleges the developer then failed to make additional monthly interest payments between April 2009 and July 2010, leading the lenders to accelerate the payments due and call in the entire loan.
The developer also failed to pay $2.3 million in real estate taxes to the city Department of Finance, according to the complaint, but made a payment in July after the city filed tax warrants. As of last month, the developer owed a total of $165.3 million in principal, interest, protective advances and other fees. After adding on additional default interest and other fees, the total amount due came to $196.7 million.
Simon Elias and Izak Senbahar, the main developers behind Alexico, are also facing a related a suit which seeks to foreclose on a $10 million personal guarantee related to the property. Elias and Senbahar were not immediately available for comment.
Just two months ago, Atlas Capital filed suit to foreclose on an $82 million loan balance at Alexico’s Alex Hotel, at 205 East 45th Street. Atlas Capital acquired the Flatotel and Alex loans after the previous lender put the distressed notes up for sale. Anglo Irish has been looking to unload much of its distressed debt at the Alex, Flatotel and the Mark, another distressed hotel in the Alexico portfolio.
The Wall Street Journal reported earlier this week that Alexico is reaching out to Goldman Sachs for financing to buy back the mortgage debt at the Mark, which is about $270 million.
Alexico officials were not immediately available for comment and neither were lawyers for Atlas Capital.