Two lenders put squeeze on Abraham Leifer’s Brooklyn hotel
Cingulate Group co-founder seeks $5M judgment while Acres seeks takeover of project
An unfinished 22-story hotel in Downtown Brooklyn, known for its zebra-like mural, is under renewed financial pressure this week after its owners were sued by Avraham Cohen, a co-founder of Rabbi Abraham Moyal’s private equity firm Cingulate Group over a mezzanine loan.
Senior lender Acres Capital sought to foreclose on the project last November, and negotiations for a deed in lieu of foreclosure are underway, according to the lawsuit.
The 51,000-square-foot hotel at 291 Livingston Street, with a potential to have 104 guest rooms, is 80 percent complete and is for sale, according to marketing materials. The building gets a tax break from the city’s Industrial and Commercial Abatement Program.
In the meantime, Cohen alleges that companies connected to Abraham Leifer’s Aview Equities have failed to repay its mezzanine loan, despite a workout agreement that extended its maturity date and raised the balance due from $3.5 million to $4.7 million.
In a phone interview, Cohen said that Cingulate Group had no role in making the mezzanine loan, and that the shared address and other affiliations between the lender and the limited liability company that filed the suit, Wu 291 Realty, were merely for convenience.
Cohen does claim on LinkedIn to be president of the Cingulate Group, but said the mezzanine loan was funded by “friends and family,” including his wife’s family, in Asia.
Owners of the hotel defaulted on the loan agreement by “likely misrepresent[ing] whether a default existed in connection with the senior debt at the time of the closing and because [they] may have misrepresented the relevant organizational structure,” according to Cohen.
Cohen accused the hotel owners of failing to disclose financial details about the project. It has asked the court for a judgment of just over $5 million, representing a 9 percent interest on the original loan amount beginning in June 2019.
The hotel at 291 Livingston is not the only property where Leifer is trying to cut his losses. A residential conversion project in Midtown developed by his firm is also up for sale. Leifer did not return a request for comment.
The Cingulate Group invests in “multifamily, condominium, retail, hospitality, industrial, office and mixed-use properties,” according to its website. A website link that invites users to “get to know our team” returns an error. Cingulate Group’s co-founder, Moyal, reportedly lobbied the Congolese government on behalf of Israeli billionaire and mining magnate Dan Gertler.
Legislation passed by the City Council and de Blasio administration has largely shut down hotel development on behalf of the hotel workers union, which should give an advantage to projects that got underway before the law passed. But some, apparently including Leifer’s, are still coping with delays and cost overruns related to the pandemic.
The market overall has largely come back, however, and lucrative deals are getting done. Boutique hotel operator Standard International is in contract to buy the 97-key Sixty Soho hotel at 60 Thompson Street for more than $1 million per room, and a South Street Seaport hotel once flying the Cipriani flag sold for about $900,000 per room.
This article has been updated with comments and information from Avraham Cohen.