A judge struck down Ambase Corporation’s bid to block a strict foreclosure on the Midtown luxury condo development 111 West 57th Street Tuesday, meaning the investor’s stake in the project may soon get wiped out.
The project faces a capital shortfall and last month a mezzanine lender, Spruce Capital Partners, filed for strict foreclosure, which would transfer ownership without an open auction. Ambase alleges that developers Michael Stern, of JDS Development Group, and Property Markets Group CEO Kevin Maloney are in cahoots with Spruce and plan to use the foreclosure to get Ambase out of the project.
Ambase, a small real estate investment trust based in Delaware, bought a 59 percent stake in the development in 2013 but did not meet subsequent capital calls, so its stake in the project shrank. The investor sued the developers in early 2016, alleging that they were using unnecessary capital calls to dilute its stake. That case is still ongoing. The developers countersued, alleging that Ambase is blocking crucial funding for the tower.
Earlier this month, The Real Deal broke the news that Qatar’s sovereign wealth fund is a lender on the project.