The Real Deal New York

Pressure mounts for Midtown owner Alrose

Two banks selling $44M in debt on five of the firm’s properties
By Adam Pincus | June 03, 2011 06:01PM

Allen Rosenberg, 120 East 32nd Street, Indigo Condominium at 125 West 21st Street, 289 10th Avenue and Allegria Hotel & Spa in Long Beach

The flip side of the story of real estate investors who have taken advantage of the downturn and snapped up discounted properties is the city’s owners who are losing them one by one.

One such mid-sized landlord who built up a modest portfolio in Manhattan and Long Island and is now losing them is Allen Rosenberg. In 1990, he founded the Alrose Group, with offices in Midtown and Woodmere, L.I. His website shows over the years he acquired 23 properties in New York City, Long Island, New Jersey and Maryland.

Now, he is under pressure from lenders who are selling the notes on three of his Manhattan retail properties with a face value of $11.5 million, as well as the $2.7 million loan on a 35,000-square-foot shopping center in Commack, L.I. In addition, $30 million in loans on the luxury Allegria Hotel & Spa in Long Beach, L.I. is being sold, according to sources. Alrose did not respond to requests for comment.

Insiders said that although the note may change hands, the Alrose Group continues to own the property until it is foreclosed on or is sold.

An increase in banks marketing notes is to be expected, real estate professionals say. They anticipate lenders will sell more loans or real estate owned [REO] properties this year compared to last year, because as lenders’ balance sheets improve they can sell more non-performing assets.

Charles Toppino, president of California-based Oak Pass Capital Management, said he expected a rise in such transactions. He was speaking on a panel Wednesday organized by Information Management Network in Midtown.

“Large banks have more capital, so there will be more sales,” Toppino said.

Investment sales activity in New York City rose in the first quarter of 2011 to $3.9 billion compared with the same period a year earlier when it was $2 billion, figures from Massey Knakal Realty Services show.

At least two banks are selling notes secured by Alrose properties. Brooklyn Federal Savings Bank is selling the $4.5 million note at 120 East 32nd Street, a four-story loft building in Kips Bay. There, the city’s Department of Homeless Services has a 12-year lease that covers all costs — known as a triple net lease — which expires in August 2016. The city currently pays Alrose Group more than $612,000 per year for the use of the Kips Bay site, documents obtained by The Real Deal reveal.

The small building, between Park and Lexington avenues, is just 7,656 square feet, according to, giving the lease a price of about $79.93 per square foot. That price is far above average office rents in Midtown Class B buildings, which were $42.38 per square foot in April, figures from commercial services firm Cassidy Turley show.

In addition, lender Capital One is selling the $4.9 million note secured by the Alrose Group’s commercial condominium at the Indigo Condominium at 125 West 21st Street, between Sixth and Seventh avenues. Capital One is also selling the $2.7 million debt secured by the company’s Peppertree Commons, the 35,000-square-foot shopping center at 6401 Jericho Turnpike in Commack.

David Schechtman and Alan Miller, both senior directors with investment brokerage Eastern Consolidated, were marketing those three notes.

Brooklyn Federal was selling another note of Rosenberg’s, a $1.2 million note secured by a lease at 289 10th Avenue, between 26th and 27th streets, the location of the popular nightclub Marquee, sources revealed.

And a third piece of Brooklyn Federal debt, this one secured by the 143-room Allegria Hotel with a face value just under $30 million, is being marketed by the bank. However, it was being offered for sale but without a broker, one insider said.

Rosenberg developed the hotel after paying $22 million for the King David nursing home on the Atlantic Ocean and converting it into a luxury destination, now charging up to $479 per room, the company website shows.

Although the hotel opened in 2009, the developer has been sued in New York State Court in Nassau County by at least eight contractors such as Feldman Lumber and Arsenal Scaffold, which are likely seeking payment for services rendered, records on the state court website shows.

Schechtman said he has seen an uptick in the amount of properties he is listing, including from owners in distress.

“It is never a pleasant experience but oftentimes it is more a question of loss mitigation or failure to profit,” Schechtman said. “So unlike foreclosure of a personal residence, a commercial foreclosure — again while not pleasant — does not necessarily mean ruination.”

3 Responses to “Pressure mounts for Midtown owner Alrose”

  1. February 03, 2012 at 9:56 pm, Lloyd Goldman buys UES retail building for $13M said:

    […] were putting pressure on the Alrose Group last year by putting several of his loans on the market, and in addition he […]

  2. February 04, 2012 at 9:05 pm, Lloyd Goldman buys UES retail building for $13M « « TEAM3P TEAM3P said:

    […] were putting pressure on the Alrose Group last year by putting several of his loans on the market; in addition, the […]

  3. November 02, 2012 at 12:53 pm, IHOP signs for 49 years in West Village | Khizer Salmon said:

    […] last summer, it looked like Rosenberg was in danger of losing several assets, as two of his lenders were selling $44 million of debt on […]