Madison Realty Capital, a frequent initiator of foreclosure actions, is now set to lose its retail space at the historic Williamsburgh Savings Bank building.
A New York judge allowed lender Amherst Capital to proceed with its foreclosure on the Downtown Brooklyn retail condominium, owned by a joint venture of Madison and private equity firm Siguler Guff, after ruling that the venture defaulted on a $22.2 million loan.
But that’s not the worst news for Madison.
The firm’s co-founders Josh Zegen and Brian Shatz signed personal guarantees on the loan, according to the lawsuit and the judge’s order, making them liable for some of the debt.
Madison has developed a reputation as a hardball lender and has started numerous foreclosure battles with New York property owners in recent years. It rarely finds itself on the other side of a foreclosure action.
Madison and Siguler Guff bought the 41,400-square-foot property in the former bank building in 2015. The tower, also known as One Hanson Place, was constructed between 1927 and 1929 and served as a headquarters for the Williamsburgh Savings Bank. Until 2009, it was the tallest building in Brooklyn and was known for its dome top, which mimics a cathedral.
“A lot of the tenants who are moving to Brooklyn don’t want just a typical, cookie-cutter space.” Zegen told the New York Daily News at the time. “They want something unique.”
Madison and Siguler Guff were betting on a new wave of high-end retailers coming to Downtown Brooklyn, and an Apple Store opened across the street in 2017. A year later, the joint venture secured three loans from an Amherst fund totaling $22.2 million.
But finding a tenant proved difficult. The tower is landmarked, making renovations to the exterior or interior nearly impossible. Then came Covid and, still without a retail tenant, Madison and Siguler Guff defaulted on the loan in the summer of 2020.
The lender alleges the joint venture failed to make its debt service payments and its reserve funds faced shortfalls. In addition, Madison and Siguler Guff failed to pay common charges and assessments to the condominium board, leading to a lien against the property.
The joint venture blamed the pandemic for the property’s financial issues in court filings.
In November, a judge ruled in favor of Amherst’s motion for summary judgment, allowing its foreclosure to move forward. Earlier this month, a judge approved an order for the referee to calculate the amount of relief. A sale has not yet been scheduled.
Madison Realty declined to comment. Siguler Guff did not respond to a request for comment.
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