This year’s highest-priced state court auction in Manhattan set for Murray Hill tower

New York /
Sep.September 14, 2011 05:01 PM

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From left: David Scharf and Jay Eisenstadt and 47 East 34th Street (building credit: PropertyShark)
Manhattan’s largest state court foreclosure auction of the year is set for later
this month in Murray Hill. The auction is to sell the temporary-housing tower at
47 East 34th Street where the California real estate investment firm CIM Group
owns the defaulted note with a $93.2 million judgment.

Project developer Esplanade Capital, whose principals are David Scharf and Jay
Eisenstadt, lost control of the 36-story building with 110 units this May.

CIM Group bought the loan from lender iStar Financial May 13 for an
undisclosed amount following a final court judgment against Esplanade. A state court judge had placed it in the hands of a court-
appointed receiver in March of last year.

Although iStar sold the note in May, it kept an investment in the property, with a
$20 million loan to CIM, city records show.

BridgeStreet Corporate Housing, an extended-stay residential company with
locations around the world, currently occupies the building on a $400,000-per-
month lease that runs through Dec. 31, court records show.

The next highest judicial foreclosure auction scheduled in Manhattan this
year was set for Aug. 24 for the Upper East Side Courtyard by Marriott at 410
East 92nd Street that had a judgment amount of $74 million, according to
analysis of PropertyShark.com data by The Real Deal
. The owner filed for bankruptcy last month to halt that
auction.

In addition, there were larger auctions outside of state court, such as the $190
million sale of Yitzhak Tessler’s 1107 Broadway through the Lehman Brothers
Holdings bankruptcy proceedings.

Esplanade had a plan to sell the East 34th Street property in a bulk-deal to
Sorrento Asset Management, of Dublin, Ireland, for $96.7 million. But Esplanade defaulted on its
original loan of $76 million from iStar and the lender foreclosed. The court set the
judgment at $93 million on Aug. 25.

The auction is planned for Sept. 27 at the New York State Supreme Courthouse
in Lower Manhattan. However, owners often file for bankruptcy in the days or
hours before a property is slated to go up for sale to block the auction. Yet one
insider familiar with the deal, who asked not to be identified because he was
not authorized, said, “I think the auction will go forward.” There are no brokers
involved.

CIM did not respond to a request for comment. Matthew Parrott, a partner with
Katten Muchin Rosenman, who is representing CIM Group, declined to comment,
as did a spokesperson for David Feuerstein, partner with Herrick, Feinstein, who
represents several of the developers involved in the project, including Scharf and
Eisenstadt.

In just under two years, CIM has acquired the Drake hotel site at 440
Madison Avenue, has invested in Harry Macklowe’s 737 Park Avenue and
was negotiating to buy the debt at 172 Madison Avenue,
a few blocks from the 34th Street site.


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