Florida developer takes over defaulted debt on 125 Greenwich

The move throws the project into further uncertainty, as it faces two foreclosure proceedings

Jul.July 29, 2019 10:00 AM
125 Greenwich Street

125 Greenwich Street

A senior lender who moved to foreclose on 125 Greenwich, the under-construction residential tower in the Financial District, has sold the debt to a real estate development firm.

United Overseas Bank, which provided a $195 million loan to the luxury project’s sponsors, sold the senior debt to real estate development firm BH3 Capital Partners at cost, a person close to the deal told The Real Deal.

The move spells further uncertainty for the Rafael Vinoly-designed tower, which topped out at 88 floors earlier this year. The project’s sponsors — Howard Lorber’s New Valley, Davide Bizzi’s Bizzi & Partners, the Carlton Group and China Cindat — have defaulted on loan repayments as they have struggled to meet condo sale thresholds. The developers are now facing two foreclosure proceedings.

Earlier this month, a mezzanine lender on the project, U.S. Immigration Fund, also scheduled a foreclosure auction on the project for August. The EB-5 visa firm, led by Nick Mastroianni, had provided a $194 million loan for the project.

The $195 million note that United Overseas Bank and a consortium of junior lenders provided for 125 Greenwich was only a piece of a total $473 million commitment to fund the project to completion. The lenders hadn’t released anymore of the total funds as of June, when the borrowers defaulted on loan payments and failed to pay construction crews at the site.

The new lender, BH3, is a Miami-based real estate development firm and, given its history of developing projects, it is possible the firm could complete the project itself. Unlike UOB, BH3 is not constrained by the needs of a bank to offload non-performing loans, and the new firm has multiple options for the project’s future, including proceeding with a foreclosure started by UOB this month. In that event, more than $100 million equity in the building and USIF’s $194 million mezzanine loan would be wiped out.

Uncertainty around BH3’s plans for the building also throws a potential refinancing into limbo. According to sources, Silverstein Capital Partners, the lending arm of Silverstein Properties, had signed a term sheet with the project’s sponsors to refinance the project to keep it afloat, thereby offsetting the two foreclosure proceedings.

The tower’s total projected sellout is $875 million, and units are priced between $1.3 million and $6 million. Douglas Elliman, the brokerage which Lorber runs as chairman, is handling sales.

Representatives for New Valley, Silverstein, Bizzi & Partners, China Cindat, UOB, BH3 and USIF did not immediately respond to requests for comment.

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