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Terzi owes $58M and counting on Midtown SoulCycle building: suit

The retail landlord faces a growing number of foreclosures across his Manhattan portfolio

Retail landlord Jack Terzi and 240 East 54th Street (Jack Terzi)
Retail landlord Jack Terzi and 240 East 54th Street (Jack Terzi)

Yet another creditor is coming after retail landlord Jack Terzi.

Wells Fargo is moving to foreclose on Terzi’s three-story property at 240 East 54th Street on behalf of CMBS bondholders, alleging he owes $57.7 million on a pair of notes on the property, with the debt growing $10,000 every day he doesn’t pay up.

The founder of JTRE Holdings, Terzi is battling creditors across his Manhattan portfolio. Wells Fargo is moving to foreclose on his property at 63 Spring Street in Soho on behalf of other bondholders. Two weeks ago, Terzi filed a last-minute bid to scuttle a foreclosure sale of his retail condo at 349 Broadway, also in Soho. A separate foreclosure auction on Terzi’s commercial unit at 27 West 72nd Street is slated for Wednesday.

Apart from illustrating the ongoing distress in Terzi’s portfolio, the fiasco also shows the winding path a securitized mortgage can take on the market. Loancore Capital Markets originated a $42 million commercial mortgage secured by the property in 2017. Less than a year later, Loancore split the note in two, with each half worth $21 million. Almost immediately, it assigned one of the notes to Deutsche Bank, which then assigned it to German American Capital Corporation, which then assigned it to the current bondholders.

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Terzi missed a debt service payment on the mortgage in April 2020, according to the filing, the same month he missed a payment on his Spring Street mortgage and a month after he stopped paying at 349 West Broadway. The bondholders declared the Midtown loan in default in July 2020, and accelerated it in full at the end of the year.

Wells Fargo also accuses Terzi of taking a mechanic’s lien on the property in violation of a covenant in the mortgage.

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When he bought the building in 2015, Terzi turned it into a health hub with SoulCycle and discount gym chain Blink Fitness as tenants.

He did not respond to a request for comment.

Tags
Commercial Real EstateForeclosuresMidtown EastRetail Real Estate