HFZ, Ziel Feldman sued for default on Upper East Side loan

W Financial REIT alleges developer has paid nothing on $44M loan since June

Ziel Feldman with 150, 152 and 154 East 79th Street, and 1131 and 1135 Lexington Avenue (Getty, Google Maps)
Ziel Feldman with 150, 152 and 154 East 79th Street, and 1131 and 1135 Lexington Avenue (Getty, Google Maps)

Another day, another lawsuit for HFZ Capital Group and its founder, Ziel Feldman.

Great Neck, New York–based W Financial REIT is suing an affiliate of HFZ and Feldman for defaulting on a loan tied to five Upper East Side properties.

W Financial REIT provided the $43.6 million loan in February for five properties: 150, 152 and 154 East 79th Street, and 1131 and 1135 Lexington Avenue. The lender alleges that Feldman, HFZ’s managing principal, personally guaranteed the loan.

The suit, filed Tuesday in Nassau County Supreme Court, alleges that HFZ first defaulted on the loan in June and again in the following months. The lender alleges HFZ still has not repaid the loan.

The lender is also seeking accrued interest and other fees in addition to the $43.6 million principal. In total, W Financial REIT aims to collect about $48.6 million.

The Upper East Side acquisition was possibly part of an assemblage to build a larger development.

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HFZ had purchased the three properties on 79th Street in March 2020, having acquired the two Lexington Avenue sites in 2017 and 2018. The firm paid a combined $78.75 million for the five properties, records show.

Neither W Financial REIT nor its attorney responded to a request to comment. HFZ also did not respond to a request to comment.

The case adds to the growing list of lawsuits against the New York development firm and its founder.

HFZ was once one of the city’s most prolific condo developers, but it has become entangled in liens and litigation. At its trophy project, the XI condo development in Chelsea, construction has come to a halt. And sources previously told The Real Deal that its lender, the Children’s Investment Fund, was in talks to bring on a new developer to finish the project.

Feldman, who founded the firm in 2005, guaranteed a number of the loans financing HFZ’s projects. Many of these loans are now in default, leaving Feldman personally on the hook to cover the shortfalls.

In the meantime, Feldman has been unloading his personal residences including one in the Hamptons, which fetched $50 million.