Madison Realty sues Waterbridge over botched $38M loan deal

Flatiron office building was also subject of lending controversy with last owner

New York /
Oct.October 09, 2013 03:25 PM

An affiliate of Madison Realty Capital has sued Waterbridge Capital for allegedly backing out of an agreement to borrow $38 million to buy a Flatiron District office building.

The investment firm, through an entity called MRC RE Holdings LLC, is seeking $760,000 – the breakup fee required as part of an exclusivity provision in the agreement – as well as legal fees for the alleged breach of contract, according to the lawsuit, filed last week in New York State Supreme Court.

As part of its purchase of 119 West 25th Street, Joel Schreiber’s Waterbridge agreed to take the loan from Madison Realty, and then secured $32 million in financing from Midtown East-based lender Ladder Capital Finance instead, according to the suit. Working with another lender violated the terms of the initial loan commitment with Madison Realty, the suit said. The defendants are listed as Schreiber, who declined to comment, and two limited-liability companies affiliated with Waterbridge.

“The commitment letter had an exclusivity provision which provides that if the borrower or guarantor obtains funding from another source or sells, assigns [or] otherwise conveys the collateral that the borrower is responsible to pay Madison a breakup fee,” Madison Realty’s attorney, Jerold Feuerstein of the law firm Kriss & Feuerstein, said in a statement.

Waterbridge partnered with private equity firm Normandy Real Estate Partners to buy the 135,000-square-foot property for $50 million in July, as The Real Deal reported. The companies aim to redevelop it into a Class A office building with a ground-floor retail component. Normandy – which is overseeing redevelopment, property management and leasing at the site – declined to comment for this story.

The building, located between Sixth and Seventh avenues, has been at the center of a loan controversy before. Brooklyn-based investors Miriam and Michael Chen had acquired it for $34 million in 2006 but later defaulted on a $34 million loan granted to them by California-based lender Cathay Bank. A foreclosure judgment was issued against the property in September 2012.

The building was once home to an artist-run exhibition space named Silvershed.


Related Articles

arrow_forward_ios
Joel Schreiber, RedSky land $104M refi for Williamsburg portfolio
Joel Schreiber, RedSky land $104M refi for Williamsburg portfolio
Joel Schreiber, RedSky land $104M refi for Williamsburg portfolio
How Joel Schreiber made a killing as WeWork’s first investor
How Joel Schreiber made a killing as WeWork’s first investor
How Joel Schreiber made a killing as WeWork’s first investor
Madison Realty Capital’s Josh Zegen (Madison Realty Capital)
Inside Madison Realty Capital’s distressed investing playbook
Inside Madison Realty Capital’s distressed investing playbook
Madison Realty Capital's Josh Zegen with 315-326 15th Street (MRC, Getty, Urban Architecture)
Downtown Jersey City dev secures $167M bump in construction financing
Downtown Jersey City dev secures $167M bump in construction financing
Quintin Primo, Joel Schreiber and Broadway Trade Center (Linkedin, Getty, OMGIVING)
Quintin Primo’s deal to buy the Broadway Trade Center is dead
Quintin Primo’s deal to buy the Broadway Trade Center is dead
Joel Schreiber, WeWork’s first investor, under fire on multiple fronts
Joel Schreiber, WeWork’s first investor, under fire on multiple fronts
Joel Schreiber, WeWork’s first investor, under fire on multiple fronts
Eli Karp with 271 Lenox Avenue
Judge appoints receiver on Eli Karp’s Flatbush property
Judge appoints receiver on Eli Karp’s Flatbush property
From left: Arch Companies' Jeff Simpson and Hello Living's Eli Karp along with a rendering of 1580 Nostrand Avenue (Getty Images, Arch Companies, Hello Living)
Eli Karp’s Hello Living says goodbye to Flatbush project
Eli Karp’s Hello Living says goodbye to Flatbush project
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...