Madison Realty Capital has taken steps to foreclose on Real Estate Equities Corp.’s leasehold interest at 1 St. Mark’s Place in the East Village.
The New York City–based Madison has owned the $48 million loan package backed by REEC’s East Village property since 2019. The real estate private equity firm acquired the debt from South Korean financial services firm Hana Financial group, which provided REEC $79.1 million of debt and sold the $48 million portion to Madison Realty Capital.
Madison filed a complaint with the state Supreme Court in Manhattan, alleging that REEC defaulted on the $48 million mortgage, which combines an acquisition loan and construction loans.
“We are working on a recapitalization plan and are optimistic that this will be resolved in the near future,” a spokesperson for REEC told The Real Deal.
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The state has extended its Covid-19 emergency eviction and foreclosure moratorium for commercial property owners until Aug. 31. Madison Realty Capital, which declined to comment, stated in the filing it has not received a hardship declaration from the borrower.
In 2017, REEC paid $150 million for a 99-year leasehold on a three-parcel assemblage at 1 and 3 St. Mark’s Place and 25-27 Third Avenue, TRD reported.
REEC plans to build a nine-story, 68,000-square-foot boutique office building to attract tenants paying top-dollar rents. The site is across Third Avenue from Minskoff Equities’ 51 Astor Place, where IBM Watson Group is headquartered.
Manhattan’s office availability rate is at a record-high of more than 17 percent. But many developers and landlords say that high-quality office products in desirable locations should still be able to attract tenants.