Fortis faces foreclosure on large Cobble Hill condo project

Fortis Property Group’s big plans to redevelop a quiet part of Cobble Hill into a three-building luxury condo development have run into trouble.

Lender Madison Realty Capital has initiated a UCC foreclosure sale for the equity interests on development sites at 350 Hicks Street and 91-95 Pacific Street, where Fortis plans two condo buildings totaling 150 units.

The Hicks Street building, called 1 River Park, is to rise 20 stories and contain 48 apartments above a parking area and a community space. At the Pacific Street site, 2 River Park will have 102 residential units.

A third building, the 25-unit 5 River Park at 347 Henry Street, is not part of the UCC foreclosure and is “almost 75 percent sold,” according to Fortis’ website.

The sale of the equity interests in the two sites would satisfy $47.7 million in debt, according to marketing materials. The sale is set for Sept. 29. The reason for the default is not clear.

The foreclosure notice comes as another major Fortis project, its planned 60-story condo tower at One Maiden Lane in the Financial District, remains unfinished amid a dispute between Fortis and its lender over cash-flow and construction issues.

The firm has had more success in Brooklyn, where its 76-unit Olympia Dumbo is home to some of the borough’s most expensive real estate on a per-square-foot basis.

Fortis and Madison Realty could resolve the foreclosure prior to the auction date by restructuring the debt or agreeing on an extension, averting a sale.

Fortis acquired the Cobble Hill site in 2015 as part of a $240 million deal with the State University of New York for 18 buildings that were formerly part of the Long Island College Hospital Campus.

That deal later drew scrutiny over Mayor Bill de Blasio’s alleged role in facilitating it.

The former mayor, who was arrested during his 2013 campaign for protesting the closure of the hospital on the site, helped broker the deal to sell the property after taking office. Former Manhattan U.S. Attorney Preet Bharara investigated de Blasio’s involvement in the sale, multiple news outlets reported at the time, but did not bring charges.

De Blasio then pushed for a rezoning at the hospital site to allow for both greater density and affordable housing, but then-Council member Brad Lander, who represented the neighborhood, opposed it. Fortis ultimately decided to go with market-rate condos, which did not require a rezoning.

Soon after winning the bid, Fortis secured a $107 million bridge loan from Madison Realty. Two years later, Madison Realty provided Fortis with a $297 million construction loan for the three condo buildings.

“Madison offered us an opportunity to leverage the property at a reasonably priced cost of funds relative to the dilution we would have taken if we brought in a partner,” Fortis’s Jonathan Landau told The Real Deal in 2016.

Greg Corbin, president of bankruptcy and restructuring at Rosewood Realty Group, is marketing the foreclosure sale. Matthew Mannion of Mannion Auctions is the auctioneer.

Fortis did not immediately return a request to comment. Madison Realty declined to comment.