HFZ facing foreclosure on nationwide industrial stake

Ziel and Helene Feldman personally guaranteed $114M loan, according to lawsuit

National /
Nov.November 09, 2020 10:05 AM
Ziel Feldman and (clockwise from top left) 2121 North 161st East Avenue, Tulsa, OK; 707 Spence Lane, Nashville, TN; 1600 East Butler Avenue, Flagstaff, AZ; and 500 Bailey Avenue, Buffalo, NY (Getty, Google Maps)

Ziel Feldman and (clockwise from top left) 2121 North 161st East Avenue, Tulsa, OK; 707 Spence Lane, Nashville, TN; 1600 East Butler Avenue, Flagstaff, AZ; and 500 Bailey Avenue, Buffalo, NY (Getty, Google Maps)

Ziel Feldman’s financial problems keep piling up.

The HFZ Capital developer — already battling lenders on a handful of high-end Manhattan residential developments — is facing foreclosure on his stake in a portfolio of national industrial properties.

Chicago-based credit investor Monroe Capital has moved to foreclose on a roughly $126 million loan HFZ owes on the 12-property portfolio, according to public documents and sources familiar with the matter.

The auction is scheduled to take place in Manhattan on Dec. 2. A principal at HFZ, however, insisted that the auction has been called off and is no longer moving forward.

The principal pointed to a decision on a motion in an August lawsuit Monroe Capital filed against Feldman in State Supreme Court in Manhattan, arguing the decision meant the case had been dismissed, nullifying the UCC action.

HFZ, however, has successfully argued to have the case’s documents sealed. And Monroe has at least two open cases against HFZ in New York court, so it’s difficult to ascertain the decision’s impact on the overall actions.

Sources at Monroe, as well as the brokerage and law firm handling the UCC sale, confirmed the auction is moving forward as planned.

The properties in question are a group of warehouses and distribution centers in Upstate New York, Illinois, Florida, Wisconsin, Ohio, Oregon, Tennessee, Oklahoma and Arizona that HFZ owns in a partnership with Westchester-based industrial investment firm Reich Brothers.

Only HFZ’s equity interests — not Reich’s ownership stake — are up for sale in the auction.

Monroe Capital extended a $113.5 million loan on the properties in 2017 to HFZ, which was personally guaranteed by Ziel, his wife Helene and their family trust. HFZ ran into trouble this summer when it failed to make debt-service and quarterly amortization payments totaling about $25 million, according to court documents. Monroe claims that once default interest is factored in, HFZ owes the lender nearly $126 million.

While the industrial portfolio stretches all the way to the West Coast, HFZ has problems that hit closer to home.

The developer is facing a similar foreclosure action on its equity interests in four Manhattan condominium projects, as The Real Deal previously reported.

At yet another project, the Chatsworth co-op conversion at 344 West 72nd Street, Barry Sternlicht’s Starwood Capital is also suing HFZ claiming the developer failed to abide by a forbearance agreement.

And on the Upper East Side, HFZ owes more than $18 million in defaulted loans on a planned development project at 1135 Lexington Avenue, according to a lawsuit filed last week. Feldman and HFZ managing principal Nir Meir are listed as personal guarantors on the debt.





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