An Upper East Side condo developed by Wonder Works Construction is facing UCC foreclosure, the latest in a spate of recent actions taken against struggling condo developers.
A team of JLL brokers, including Brett Rosenberg and Jeffrey Julien, has been retained by mezzanine lender Nahla Capital to shop the loan for the Vitre condo at 302 East 96th Street, according to marketing materials reviewed by The Real Deal.
It was not immediately clear how much Nahla’s mezzanine loan was being offered for in the UCC foreclosure auction — subordinate debt is not recorded with the city. However, the tower secured $68 million in refinancing last year, which included a $43 million loan from Deutsche Bank.
Wonder Works, Nahla and JLL did not respond to requests for comment. Compass broker Alyssa Soto Brody, who is handling sales at the building and is married to Wonder Works principal Eric Brody, also did not respond.
The Vitre condo launched sales in 2017 and nine of its 48 units were in contract by July 2018, according to an amendment to the offering plan. But sales appear to have plateaued since, and the latest filing shows that 40 units remain unsold, indicating one buyer backed out.
Before the pandemic, developers had pitched investors on bulk-buy opportunities at the 21-story project, according to two sources familiar with the matter. No such deals ever moved forward.
The offering is the latest in a series of distressed opportunities to come up in New York, as the pandemic tips struggling projects further into the red. Newmark Knight Frank is currently shopping the mezzanine positions on four of HFZ Capital’s New York condos. The construction loan tied to 161 Maiden Lane — the “leaning” Seaport condo — is also up for sale.
Lenders can use the Uniform Commercial Code, or UCC, to foreclose on collateral — usually an ownership interest in a property — without having to go through a lengthy court process.
However the code’s requirement that the foreclosure be “commercially reasonable” complicated matters during the pandemic, as borrowers queried the reasonableness of foreclosing when the economy is in such a state of disrepair. A New York Supreme Court decision in August held that a UCC foreclosure in that case could not go ahead until Oct. 15.
The Vitre’s UCC auction is scheduled for Dec. 8.