Bauhouse sues Gamma to block 3 Sutton Place foreclosure

Developer gets temporary restraining order against lender's planned auction of Midtown property

TRD New York /
Feb.February 18, 2016 12:40 PM

UPDATED, 6:00 p.m., Feb. 18: Bauhouse Group is striking back against Gamma Real Estate’s bid to foreclose on its planned 68-story 3 Sutton Place condo tower, filing suit against the lender and obtaining a temporary restraining order against a foreclosure auction for the property.

Bauhause defaulted on $128.8 million in loans from Gamma Real Estate last month, prompting the Richard Kalikow-led lender to initiate foreclosure proceedings on the development site at 428-432 East 58th Street.

Gamma was scheduled to sell off the loan collateral via auction last week and later pushed back the auction to Feb. 29, according to a lawsuit filed in New York State Supreme Court on Wednesday. The lender retained Eastdil Secured to market the property to potential bidders.

But on Thursday, Bauhouse received a temporary restraining order against Gamma’s planned foreclosure sale at the end of this month, according to attorney Stephen Meister of Meister Seelig & Fein, who is representing Bauhouse. The two sides will meet again in court on Tuesday morning.

Meister Said The Court was “troubled” by a confidentiality agreement implemented by Eastdil, which he said “does not permit a bidder to give information about the project to his own lender” before the foreclosure auction.

The Joseph Beninati-led development firm’s lawsuit mirrored those concerns, claiming Gamma had made it “extremely difficult to access information” about the 3 Sutton Place development site with the goal of “chilling any bids” and assuring the lender was the sole bidder for the project.

“There is no purpose to the confidentiality agreement other than to chill bidding, and Kalikow’s lawyers were unable to dream one up,” Meister told The Real Deal. “Kalikow is trying to steal this project, which has way more than enough value to pay off his loans.”

Representatives for Gamma Real Estate could not be immediately reached for comment.

Bauhouse claimed Gamma moved forward with the auction in an “unreasonable manner,” according to the complaint, adding that the lender is demanding $45 million above the original $147.25 million loan principal – which included a $127.25 million mortgage loan and a $20 million mezzanine loan. Gamma is also charging Bauhouse “over $100,000 a day in default rate interest” on the loans, the suit said.

According to investment documents filed several months ago, Bauhouse has actively sought an $80 million mezzanine loan to fund the troubled, Norman Foster-designed skyscraper, as The Real Deal reported. The 113-unit, 283,000-square-foot condo tower has a market value “approaching $1 billion,” according to the Bauhouse complaint against Gamma.

Beninati has been searching for a joint-venture partner for months and in August said he’d have “no choice but to sell” the property if one didn’t emerge. Bauhouse received demolition permits for the site late last year.


Related Articles

arrow_forward_ios
Noah Syndergaard and 116 Hudson Street (Getty, Google Maps)

Mets’ Noah Syndergaard sued for abandoning Tribeca penthouse rental

Mets’ Noah Syndergaard sued for abandoning Tribeca penthouse rental
NY State Supreme Courthouse (Credit: iStock, Wikipedia Commons)

Courts to allow new cases to proceed, possibly including some evictions

Courts to allow new cases to proceed, possibly including some evictions
The spa (highlighted) is located at 83-02 Broadway in Elmhurst (Credit: Google Maps)

Queens spa accused of prostitution sues landlord to keep lease

Queens spa accused of prostitution sues landlord to keep lease
Photo illustration of Hidrock CEO Abraham Hidary, 54 Madison CEO Henry Silverman and 12 East 48th Street (Credit: 54 Madison Partners, iStock)

Judge green-lights mezzanine foreclosure of Hidrock’s Midtown hotel project

Judge green-lights mezzanine foreclosure of Hidrock’s Midtown hotel project
90 West Street (Credit: Google Maps, iStock)

This landlord’s legal win could give boost to other owners in overcharge cases

This landlord’s legal win could give boost to other owners in overcharge cases
From left: Anbang’s Andrew Miller, Hidrock CEO Abraham Hidary, Brooklyn Boulders CEO Jeremy Balboni

Covid and the courts: New lawsuits target busted real estate deals

Covid and the courts: New lawsuits target busted real estate deals
Former Gamma CIO Richard Kulick with CEO N. Richard Kalikow and president Jonathan Kalikow (Credit: Gamma)

Former Gamma Real Estate exec says company cheated him out of millions

Former Gamma Real Estate exec says company cheated him out of millions
The Jemal brothers are accusing each other of taking cash from their real estate companies. (Credit: iStock)

He started it: Jemal brothers accuse each other in lawsuits

He started it: Jemal brothers accuse each other in lawsuits
arrow_forward_ios

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

Loading...