Sterling handing over LI complex to lenders

May 23, 2011 09:11AM

Sterling American Property, the real estate investment management fund controlled by Fred Wilpon and Saul Katz’s Sterling Equities, is letting go of a struggling Long Island office complex in a deed in lieu of foreclosure, according to the Wall Street Journal. The 127,000-square-foot Hauppauge property, Woodlands Office Park, had a loan balance of $12.7 million as of last summer, which was being overseen by special servicer ORIX Capital Markets. Sterling, which paid $20.2 million for the three-building complex in 2006, had written down the value of its equity investment there more than a year ago, according to an attorney for the company, who added that handing back the keys will not “have any material impact on the fund’s returns or performance.” In 2006, Woodlands was 87 percent occupied; as of mid-2009, that figure had fallen to 48 percent. Meanwhile, Wilpon and Katz have bigger fish to fry as they contend with a $1 billion lawsuit filed by Madoff trustee Irving Picard, which alleges that the developers and Mets owners should have known about the Ponzi scheme before it was uncovered. The developers have denied the charges and are also seeking to sell a stake in the Mets in an attempt to come up with additional capital. [WSJ]