Mid-conversion Midtown West building on sale for $36M

Mortgage holder Isaac Chetrit and owner fought over building’s misspelled title documents
By Guelda Voien | July 31, 2013 05:30PM

A gutted office building that was once the focus of a dispute involving Isaac Chetrit and poorly proofread title documents has hit the market for $36 million, The Real Deal has learned. The property, on Midtown’s West Side, was in the midst of a residential conversion before the economic downturn, and is a sort of ready-made condominium redevelopment project for a buyer with the right finances, listing broker John Krueger, an associate with commercial brokerage Marcus & Millichap, told TRD.

The 63,000-square-foot building, at 315 West 35th Street between Eighth and Ninth avenues, is owned by Aaron Chitrik, who planned to convert it – and was halfway there – when the financial crisis hit, and the economics no longer made sense. An LLC that Krueger confirmed is associated with Chitrik nabbed the building for about $16 million in 2006.

In 2011, Chitrik found himself in the middle of an almost comical fraud suit with Chetrit, who holds the mortgage on the property.

Chetrit bought the mortgage for $10.75 million in 2010, but made a slight – and ironic – spelling error, using an “a” instead of an “e” in the title of the entity he used to purchase the asset. Thus, Mazel 315 W35 LLC, an allusion to “mazel tov,” the Hebrew phrase meaning “good luck,” became 315 W35 LLC.

While trying to take control of the building after Chitrik defaulted, Chetrit and his attorney realized that someone had taken the city records that showed a nonexistent company as the owner and written in the name “Yospeh Levin,” as principal, effectively staking claim to the mortgage. Chetrit eventually tracked down Levin and found he was associated with Chitrik, according to a report from Real Estate Weekly at the time.

“It’s as if you bought a house and your lawyer made a mistake spelling your name and then someone with that name showed up and claimed that the house was theirs,” Chetrit’s attorney, Stephen Meister of Meister Seelig & Fein, told Real Estate Weekly.

Chitrik was found to be behind the LLC that improperly claimed title to the mortgage, reports show, but in 2011 the asset was transferred back to Chetrit. Meister told the New York Observer at the time that he believed the alleged fraud was a stall tactic. It is not known if Chitrik was criminally or civilly prosecuted, though the case was handed over to the Brooklyn District Attorney’s office late in 2011, the Observer said.

Now, the value of the building — which is close to mega-project Hudson Yards – has appreciated enough that Chitrik can sell it and pay off the pre-recession mortgage, which still belongs to Chetrit, Krueger said. The building offers a number of redevelopment possibilities.

“No one has been in there for years,” he said. “But the bricks are good. … [The current owners] actually went in and already gutted it and were ready to move forward, but then the market turned.”

The 5,000 square feet of ground-floor retail could be leased as such or converted into a high-end lobby for possible condos, Krueger said. Architectural plans for 57 condos were drawn up by the current owner, who planned to add a rooftop penthouse to the 14-story office building when it became condos.

However, the new owner could also convert it to a hotel – and nearby Herald Square has emerged as a hotel magnet of late.

Numerous international investors ready for their first development project in Gotham were among the parties that have expressed interest in the building so far, Krueger said.