Stalled Brooklyn condo gets a fresh start

October 11, 2010 10:00AM

Rendering of 20 Henry Street

Buying and selling loans on distressed properties has become a thriving business in New York’s commercial real estate market. While statistics aren’t available on the volume of distressed real estate loan sales, industry officials say they’re on the rise, the Wall Street Journal reported. The latest example of this is a partnership of California investors who bought a stalled Brooklyn Heights condominium development at 20 Henry Street and is restarting construction after nearly two years of inactivity. Developer Urban Realty Partners defaulted on its loan from Bank of New York and the project’s equity partner, American International Group, collapsed during the financial crisis, sources said. Now a partnership, known as the Canyon-Johnson Urban Fund, bought the loan and took control by cutting a deal with Urban Realty and AIG Bank of New York sold the note at a roughly 25 percent discount to the unpaid loan balance. “During the past three months, activity has become more frenzied,” said David Schechtman, a principal at Eastern Consolidated who brokered the transaction. “Prices have come down but buyers are no longer demanding fire-sale prices.” [Wall Street Journal]