Flatiron office property slated to hit foreclosure auction block

West 25th Street building has an outstanding lien of more than $40 million
By Katherine Clarke | October 17, 2012 01:00PM

(Updated at 10.20 a.m. on October 22 with auction date) A Flatiron District office building one block from Madison Square Park will hit the foreclosure auction block next month with an outstanding lien of close to $41 million, following the issuance of a foreclosure judgment against the property in September.

The building, at 119 West 25th Street, had been owned by Brooklyn-based investors Miriam and Michael Chan before it was placed in receivership, records show. The duo purchased the building for $34 million via an LLC in 2006. The 11-story building, which totals 113,000 square feet and has 15,000 square feet of retail, will hit the block November 7, according to PropertyShark.com.

California state-chartered bank Cathay Bank agreed to refinance the debt on the building on behalf of the Chans in 2008 — loaning the owners $34 million, according to court documents. The Chans later defaulted on the note following its maturity in 2009. The $40.8 million lien represents the full amount of the loan as well as accrued interest. Cathay Bank later sold the loan to an LLC named LL 25 Penny in 2010, which continued the foreclosure action. The LLC’s address is registered to the law firm of Luk & Luk, based on Canal Street.

When the loan came on the market in late 2009, marketed by Howard Michaels’ Carlton Advisory Services, multiple companies were said to be interested. The New York Post reported in 2009 that the building, between Sixth and Seventh avenues, would be delivered with vacancies. The sale price for the loan was not immediately available. Neither Carlton nor Kenneth Chan was immediately available for comment.

The building is home to Silvershed, an artist-run project space that hosts exhibitions and other art-world events.

Madison Avenue office buildings have been popular with investors of late. As previously reported, a Spanish kitchen and bathroom tile company named Poreclanosa purchased a historic building near the park at 202 Fifth Avenue earlier this year for $40 million or $2,600 per square foot. The transaction set a city record for the price paid for an office building on a per square foot basis.