Shaya Labin fights Fairstead to close $93M Harlem deal
Investor, in contract to buy 538 apartments, files for bankruptcy to buy time
The clock is ticking for Brooklyn-based investor Shaya Labin, who needs more time to close on the purchase of a six-building residential complex in Harlem.
Unfortunately, the seller has run out of patience.
Fairstead, one of the nation’s largest residential landlords and owner of the Dunbar Apartments, which span a full block west of Frederick Douglass Boulevard between West 149th and West 150th streets, had granted Labin several extensions to close the $93 million deal by Wednesday.
As the Feb. 22 deadline passed, Labin played a trump card: a bankruptcy filing to “obtain additional time to close under the contract,” court records show. The bankruptcy code allows for a 60-day contract extension to close a deal and repay creditors.
“Financing is tough,” said David Goldwasser, a distressed real estate specialist who filed the Chapter 11 request for Labin. “The buyer needed more equity than they thought and couldn’t pull it off in time.”
The bankruptcy acts as an automatic stay on the deal because whatever the seller wants to do then requires the court’s permission, said Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group.
“The question is, under what circumstances bankruptcy is appropriate?” he said, adding, “The seller can challenge the bankruptcy as a bad-faith filing.”
If Fairstead successfully challenges the bankruptcy, or Labin fails to finance the deal, he will lose a $3 million deposit. Reached by phone, Labin declined to comment.
A representative of Fairstead did not return a request for comment. The Dunbar complex, starting at 2802 Frederick Douglass Boulevard, has 538 apartments across 436,000 square feet. Fairstead took on $85 million in debt against the property in 2018.
Little is known publicly about Labin. He has a history of buying smaller properties such as office buildings in Borough Park, Crain’s reported, and in Wethersfield, Connecticut, according to the Hartford Business Journal.
Fairstead has made moves in the multifamily market at a time when the asset class is considered a safe haven, at least compared with office properties.
Last summer, it put 1,800 affordable apartments on the market, seeking $400 million for the Savoy Park complex in Harlem, and partnered with Invesco to buy a 48-building residential portfolio in the Bronx in 2021 for $350 million.
“Affordable housing is such an in-vogue area of real estate right now,” CEO Jeffrey Goldberg told The Real Deal in May. “It’s a tough business. I think that it’s a lot harder than people realize.”