Sugar Hill Capital Partners, one of the biggest buyers of Northern Manhattan apartments during the multifamily boom years of the late 2010s, now faces foreclosure on one of its flagship properties.
The investment firm fell behind on its $16 million mortgage on the 54-unit building at 4300 Broadway in Washington Heights, according to a pre-foreclosure lawsuit filed by lender Signature Bank on Thursday.
Sugar Hill, founded in 2009 by former bankers David Schwartz and Alex Friedman, has failed to make payments since August, according to the lawsuit.
A representative for Sugar Hill declined to comment and a spokesperson for Signature did not respond to a request. PincusCo first reported the lawsuit.
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The legal action is particularly noteworthy because Schwartz’s company is a major borrower from Signature, which has been struggling with higher interest rates and its exposure to crashing crypto markets.
Sugar Hill, which takes its name from the Northern Manhattan neighborhood where it’s headquartered, paid $21.6 million for the 4300 Broadway property in 2016.
Three years later it leased the building’s ground-floor retail space to a 6,000-square-foot food hall called the North End Food Hall — the first of its kind in Washington Heights.
Sugar Hill went big on multifamily properties in the area near the peak of the market, before lawmakers passed a series of changes to the state rent law in 2019. The company paid $250 million in late 2018 to buy a portfolio of 53 Harlem apartment buildings from Irving Langer’s E&M Management.
At the time, Jay Solomon, then the company’s chief creative officer, stressed that Sugar Hill was a Harlem-based real estate company that “feel[s] a responsibility to our neighbors and the local community to steward these buildings with great care for years to come.”
But the multifamily landscape changed a year later, when the Housing Stability & Tenant Protection Act severely limited landlords’ ability to raise rents on stabilized apartments.
The law has since been cited as a major factor in the struggles of many multifamily investors including Isaac Kassirer’s Emerald Equities, which has lost about half of its portfolio to defaults and bankruptcy in the last few years.