Robert Gans’ lender wanted the strip club owner to put more skin in the game. But after Gans allegedly failed to put cash on the table, Richard Mack’s Mack Real Estate Group may leave him naked of a portfolio of properties.
The lender initiated foreclosure proceedings last week against 11 properties owned by Gans, claiming in court documents that Gans owes $1.7 million to an interest reserve account per a $130 million refinance loan originated by Mack Real Estate Credit Strategies.
The properties under threat of foreclosure include two strip clubs along with hardware and auto repair businesses.
Mack served Gans with a default notice in April 2020 over the missing payments, demanding the outstanding principal in full the following August, according to court filings. Gans had received $148 million from Mack and Bluestone Capital in 2018 to refinance debt on 20 properties scattered across Manhattan and Queens.
Mack declined comment on the legal action. Gans’ attorneys did not reply to a request for comment.
The mix of retail and industrial properties now under threat of foreclosure span nearly 200,000 square feet, according to city records. The remainder of Gans’ portfolio — mainly residential properties and empty lots in Corona, Queens — is not subject to foreclosure by the lawsuit.
The properties which may be foreclosed on are at 533 West 27th Street, 175 Spring Street, and 604 West 45th Street, as well as six development sites: on 11th Avenue between 45th and 46th streets, and 108-02 and 108-16 Merrick Boulevard in Jamaica, Queens.
The pandemic sharply curtailed demand for close-quarters, in-person services such as adult entertainment, likely contributing to Gans’ financial woes. However, court filings show Gans has yet to claim the pandemic caused his financial hardship, which could keep him from being evicted until January 2022. Both Manhattan clubs which Gans owns are currently closed.
Gans lost a separate court battle last May when an appellate court in Albany ruled 5-0 that he owed back taxes on revenue earned at the Penthouse Executive Club.
The pandemic has pummeled some of Mack’s other borrowers. The lender foreclosed on seven Manhattan hotel properties in March owned by a joint venture between Hersha Hospitality Trust and Chinese investment firm Cindat Capital Management. The borrowers defaulted on an $85 million mezzanine loan issued by Mack Real Estate Credit Strategies in 2018.
In Brooklyn, after Mack alleged that All Year Management defaulted on a $65 million mezzanine loan on the Denizen luxury rental building in Bushwick, the lender provided $7 million in emergency financing while the property moved through bankruptcy proceedings.