Extell faces foreclosure at Antiques Garage site

New York /
Mar.March 22, 2012 02:30 PM

Extell Development, currently in the spotlight for the ongoing success of its new Midtown development One57, is not having such an easy time at another of its prospective developments.

The company, headed by Gary Barnett, is facing foreclosure at the site of a longstanding flea market known as the Antiques Garage in Chelsea, which it purchased for $42.7 million in 2006 and for which it filed hotel plans a few years ago. A Department of Buildings filing shows Extell filed plans for a 233,544-square-foot, 29-story hotel at the site, at 112 West 25th Street, in 2009.

Wells Fargo took over for former lender Anglo Irish Bank as the holder of the mortgage at the site in December, according to a lis pendens filing by the bank, dated March 14, following Anglo’s sale of a $9.5 billion pool of U.S. commercial real estate loans last year. Wells Fargo is now filing for permission from the Supreme Court to take control of the property and put it on the market. It claims in the filing that Extell has an outstanding loan of close to $39 million.

The “borrower is liable for the plaintiff for all outstanding principal, accrued interest and fees in the sum of $38.68 million, as of Feb. 10, 2012,” the filing states, claiming its right to “obtain the greatest return on sales, whether [the site be] sold as a single parcel or sold separately as two or more parcels.”

Gary Barnett, president of Extell Development, told The Real Deal in a statement: “Extell had a loan with Anglo Irish bank on the property at 112 West 25th Street, which we kept current all through the economic downturn. We are currently in discussions with the owner of the loan at 112 West 25th Street and hope to come to a mutually satisfactory resolution.”

Anglo had agreed to lend Extell up to $67 million in installments in June 2007, according to the filing, with a scheduled maturity date of Dec. 20, 2008. The full amount was never issued in its entirety, the filing indicates. In the event of a default, the agreement states, the borrower would pay a late payment premium of 5 percent interest and an additional interest fee.

The lis pendens filing, accessed via PropertyShark.com, is not the first sign of trouble at the site, where investment sales firm Eastern Consolidated filed suit against Extell in 2010, demanding payment of more than $370,000 in commissions that had allegedly been refused for the sale of air rights in Chelsea. Eastern claimed it was the broker on a closed sale of development rights in 2010 from a four-building parcel at 120-126 West 25th Street to a company controlled by Extell, and was owed $371,800. Peter Takiff, chief financial officer for Eastern Consolidated, said the suit was “settled amicably.”

The possible foreclosure may spell bad news for Chelsea’s Antiques Garage flea market that has been operating out of a parking garage at 112 West 25th Street since 1993 when it moved from another location on Sixth Avenue. It has been allowed to continue its business until now despite the new ownership, though founder Alan Boss said the market has a month-to-month lease. If Wells Fargo takes control and sells the property, it will likely be the end of the road for the market in that location, he said.

“It may be that if there isn’t a deal to be made for Extell Development going forward, which I doubt very much, Wells Fargo would have to market the property,” he said.

Meanwhile, the market’s founder said he is scouting other prospective locations for the historic market around the city.

Attorneys for Wells Fargo declined to comment on the filing.


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