Atlas Capital to buy Jeremias’ Chelsea building: court records

Financially-strapped project has $99 million in principal and interest debt
By Adam Pincus | November 04, 2011 04:12PM

Embattled developer Harry Jeremias put his Chelsea office rehabilitation project at 216 West 18th Street into bankruptcy in order to transfer the 13-story building to a designee of Atlas Capital Group, court records show.

Jeremias’ Harch Group, through its development company 216 West 18 Owner, on Tuesday filed the so-called pre-packaged liquidating Chapter 11 bankruptcy protection plan in Manhattan, but the plan has not yet been approved by the judge.

The court records show the development company owes $74.3 million in principal and interest on a first mortgage and $24.6 million in principal and interest on a mezzanine loan, for the Chelsea property recently appraised at just $62.3 million, the filing shows.

Atlas Capital will pay the current note holder, the Fishman Group, $62 million, the court records say, but it is not clear if that is the entire consideration for the building.

Under the plan, the 170,000-square-foot building between Seventh and Eighth avenues would be transferred to an affiliate of Jeffrey Goldberger and Andrew Cohen’s Atlas Capital Group, which owns office and multi-family properties in Manhattan and London. Goldberger and Cohen are former executives with the global commercial real estate group at investment bank UBS.

Cohen declined to comment, and Jeremias and representatives from Fishman Group did not respond to requests for comment.

Jeremias likely chose the Chapter 11 plan because he is fending off two lawsuits at the building brought by first mortgage holder the Fishman Group, a real estate investment company based in Israel. One is over the defaulted first mortgage, and the other is over personal completion guarantees allegedly given by Jeremias and his development partner Tsvi Pluczenik.

The plan would resolve both pending cases, and reduce the total amount of the first mortgage to $62 million, the filing says.

The Harch Group acquired the office building from Williams Real Estate for $50 million in April 2007, and at the same time borrowed $48 million in a first mortgage and $19.56 million in a mezzanine loan, court records show. The plan was to convert the aging property into a Class A office building, but “the debtors’ business plan was highly speculative,” the filing says and as a result of the recession and a tough leasing market, “the debtors ran out of money and were unable to service the debt.”

That led to a foreclosure filing on the first mortgage in 2009, and subsequently Fishman Holdings North America, an affiliate of Fishman Group, purchased the note Nov. 17, 2010, in a deal brokered by Helen Hwang and Karen Wiedenmann of Cushman & Wakefield.