On its website, HFZ Capital Group touted plans to usher the historic Belnord rental building on the Upper West Side “into a grand new era.”
But the developer’s descent into its own new era — one defined by huge debt, scores of lawsuits and the loss of several properties — means the Belnord condo conversion will go ahead with HFZ effectively benched.
A spokesperson for Westbrook Partners, HFZ’s partner on the project, confirmed to The Real Deal that an affiliate for Westbrook is now the majority owner of the 14-story building at 225 West 86th Street and “controls all decisions with respect to the Belnord.”
“HFZ has no active role or involvement in the management or operation of the Belnord and also has no decision-making authority with respect to the project,” the spokesperson said. “HFZ’s only remaining connection to the project is that it holds a minority non-controlling residual economic interest.”
The spokesperson did not specify when the firm took over management decisions at the Belnord. Yet in September, the spokesperson noted in an email to TRD that “both Westbrook and HFZ look forward to the successful completion of this project.”
A spokesperson for Getzler Henrich, a firm hired by HFZ to assist with financial restructuring, declined to comment.
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HFZ, led by Ziel Feldman, bought the building from Extell Development in 2015 for $575 million, and started converting its rental units into condos, projecting a total sellout of $1.35 billion. In 2018, Westbrook converted its debt position in the property to equity.
Built in 1908, the building takes up a full block between Broadway and Amsterdam Avenue and East 86th and 87th streets, and features one of the city’s biggest inner courtyards, according to HFZ’s website. Robert A.M. Stern, who was brought on to design the redevelopment, described the Belnord as “one of the grandest residential buildings in New York.”
This was Feldman’s second crack at the Belnord. In 1994, he partnered with Extell’s Gary Barnett and Property Markets Group’s Kevin Maloney to buy the building for $15 million. Barnett later bought out his partners.
The Belnord was among a number of historic buildings that HFZ attempted to convert to luxury condos. But over the past year, many of those projects have been at the center of lawsuits and foreclosure actions.
Los Angeles-based CIM Group sought to foreclose on the mezzanine positions tied to four of HFZ’s conversion projects: 88-90 Lexington Avenue; The Astor at 235 West 75th Street; and Fifty Third and Eighth at 301 West 53rd Street. The foreclosure sale was halted by a judge in December, but may proceed down the road provided CIM meet certain conditions.
Feldman, who founded HFZ in 2005, guaranteed a number of the loans financing the firm’s projects. Many of these loans are now in default, leaving Feldman personally on the hook.
HFZ’s trophy project, The XI condo project in Chelsea, is also mired in uncertainty. The lender on the project, the Children’s Investment Fund, has been in talks to bring on a new developer to finish the project, TRD reported in December.