Madison Equities faces $12M foreclosure suit at Chelsea Modern

Real estate developer Madison Equities is facing a lawsuit from boutique advisory firm Hodes Weill & Associates for allegedly defaulting on a $12.1 million loan to refinance the Chelsea Modern condominium.

The suit, filed Monday in New York State Supreme Court, alleges Madison Equities, led by Robert Gladstone, took out the loan from Hodes Weill in February 2011 in order to refinance the 12-story property’s mortgage and buy out the other investors in the property.

The lender alleges that Madison Equities failed to repay the loan principal on time or deliver permanent certificates of occupancy by February 2012. According to a Feb. 2 letter filed with the complaint, the developer owes a total of $14.36 million, which includes principal, interest and legal fees and expenses.

Hodes Weill is a boutique advisory firm founded by former Credit Suisse executives David Hodes, Douglas Weill and Susan Swanezy. The loan agreement allows Hodes Weill to appoint a receiver, but it’s not clear whether the lender will exercise that option.

Chelsea Modern, a 47-unit condo just a block from the High Line at 447 West 18th Street, has sold 43 apartments for an average of $1,321 a square foot, according to Streeteasy.com. The building has eight active listings on the market for $1,442 a square foot.

In June 2010, an investor called Real Estate Capital Partners filed suit against the developer in state Supreme Court, alleging they failed to pay more than $1.6 million in returns after the project was completed. The developers reached a July 2010 deal with the investors to pay them $1.2 million as part of a settlement, according to court records.

At least two buyers previously filed suit against the developer alleging construction defects, but Department of Buildings records show no open violations. One of those cases was settled, and it wasn’t immediately clear where the second case stands.

Attorney Steven Sinatra, of Greenberg Traurig, who represents the lenders, said he could not comment without the permission of the client. Hodes Weill and Madison Equities were not available for comment. Attorney David Calabrese, of Bryan Cave, representing the developer, declined to comment, while officials at Real Estate Capital Partners were not available for comment.