Toby Moskovits’ Heritage Equity Partners is taking aim at its lender behind the planned Bushwick Hotel, alleging predatory practices spiked the development.
The developer filed a lawsuit against Fortress Investment Group, alleging it colluded with Heritage’s original mortgage lender to ruin its chances at securing the financing for the project, Crain’s reported. Bridge City Capital is the original mortgage lender for the site at 232 Seigel Street.
The lawsuit alleged Fortress and Bridge City colluded to deny the construction loan and force Heritage into default so the former could seize the development site. Fortress also owns the loan behind the adjacent 215 Moore Street, another site owned by Heritage.
Heritage alleged it tried to sell the proposed hotel site to satisfy its mortgage, only to be sabotaged by Bridge City, according to Crain’s. Bridge City instead sold the loans to Fortress, allegedly encouraging buyers to get the site from Fortress at a cheaper cost.
Fortress purchased the hotel site loan in December 2019, according to Crain’s, It proceeded to hold Heritage in default for failing to complete construction and filed to foreclose on the property in June.
The two properties are part of Heritage’s Bushwick Generator development, which includes creative and tech offices. Numerous legal disputes have roiled progress at the complex, as Moskovits has previously accused its lenders of predatory practices.
In the summer of 2020, a judge allowed for the appointment of a receiver for the Moore Street property. One month later, the Seigel Street property filed for Chapter 11 bankruptcy protection after a prospective buyer failed to close on a deal due to the pandemic.
Moskovits and Michael Lichtenstein have been scrambling to save a residential development in the Bronx at 286 Rider Avenue. Late last year, the partners claimed they secured up to $14 million to pull the property out of bankruptcy. Key details, however, such as the investor’s name, firm, previous investments in Heritage projects and contact information were redacted.
[Crain’s] — Holden Walter-Warner