Harbor Group sued after defaulting on $40M loan at Midtown retail space
Lender CIBC looks to foreclose on 18K-sf Fifth Avenue property
The Canadian bank CIBC has a message for Harbor Group International: Pay up or hand over the keys to its retail space on Fifth Avenue.
CIBC is suing companies tied to Harbor Group for failing to meet its debt payments on a $40 million loan the real estate investment firm used to acquire the 18,000-square-foot retail portion of a 33-story Midtown condo building.
The suit alleges that Harbor Group failed to make its monthly loan payment in May on the property at 445 Fifth Avenue. Should a borrower fail to make its payments, a lender can draw upon the borrower’s reserves. In this case, Harbor Group allegedly failed to keep its minimum required reserve balance of $725,000. It also never made its interest payment of $74,000 due on Sept. 10, which represented another default. Crain’s first reported on the suit.
Harbor Group bought the retail portion of the Fifth Avenue condo tower in 2015 from Thor Equities for $68 million.
Nearly all of the 18,000-square-foot retail space will be occupied by Australian firm Brickworks, which recently signed a 10-year lease and plans to open a design store next summer. The space was previously leased to jewelry store Charming Charlie, which filed for bankruptcy in 2017 and again in 2019.
And the company allegedly defaulted on a mechanic lien filed by Boston-based Dartmouth Companies, which helped secure tenants to occupy the Fifth Avenue retail space. Dartmouth claims it is owed $225,000. Harbor Group is contractually obligated to pay all mechanic lien claims, according to the suit.
CIBC’s suit also names as defendants Glen-Gery Corporation, an affiliate of Brickworks; City Souvenirs on 5th; and Dartmouth Companies.
A spokesperson for CIBC declined comment. Harbor Group did not immediately return a request for comment. Dartmouth Companies did not immediately return a request for comment. Joseph Hanson, Brickworks’s attorney, said the lawsuit will not affect the company’s plans for the space.
Earlier this month, Gov. Andrew Cuomo extended New York’s moratorium on Covid-related commercial evictions and foreclosures until Oct. 20, meaning CIBC must wait a few weeks before it can foreclose.