Joe Chetrit isn’t mincing words with Maverick Real Estate.
The press-shy developer claims David Aviram and Ted Martell’s debt firm “stole” more than $20 million by wresting control of his 34th Street hotel project.
In January, Maverick foreclosed on Chetrit’s stalled 33-story hotel development at 255 West 34th Street. Chetrit now claims that the lender ran off other potential bidders so it could take control of the property at a fraction of the fair market value.
“[Maverick] stole it for itself by paying only $100,000 in a commercially unreasonable sale that ensured no one else would show up and try to outbid it,” attorneys for Chetrit wrote in a lawsuit filed in Manhattan state court Tuesday.
Chetrit is suing for more than $20 million — the equity in the property he claims would have been left with after paying Maverick off.
Representatives for Maverick and Chetrit did not immediately respond to requests for comment.
The case pits two of New York real estate’s most controversial figures against one another. Chetrit is known as a secretive investor who’s had his hand in major deals, including at the Sony Building and 9 DeKalb Avenue.
Aviram and Martell are a pair of scrappy, distressed-debt players who in recent years have ruffled the feathers of some of the industry’s most prolific dealmakers, as The Real Deal reported earlier this year.
Chetrit cited TRD’s January profile of Maverick in his lawsuit, complaining that instead of originating loans, Maverick buys distressed debt and then “uncompromisingly and extortionately extracts every penny that it can from a borrower.”
Chetrit started construction in 2019 on the planned 323-room hotel nearby Madison Square Garden with $110 million in financing from Arbor Commercial Mortgage. But the project ran into pandemic construction delays, supply-chain problems and price increases.
Construction is stalled at the 23rd floor and needs another $46 million to be completed, according to Chetrit’s lawsuit.
Maverick purchased Arbor’s debt last May and entered into a forbearance agreement under which Chetrit paid down a portion of the project’s $19 million junior mezzanine loan. Chetrit claims he tried to negotiate with Maverick during this period, including proposing a joint venture in which two would finish the hotel together.
But Maverick rejected those proposals, according to Chetrit, and in November moved to foreclose on the site. This is where Chetrit claims things got shady.
He said Maverick included a set of unreasonable conditions on the auction designed to scare off potential bidders. Those include requiring a bidder to close within seven days of the auction, even though Maverick had 90 days to close if it won.
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Maverick also required bidders to provide unnecessary, proprietary financial information without any confidentiality agreements, and gave itself the right to amend any terms of the deal right up until the time of the auction, according to Chetrit.
Chetrit claimed more than 60 people expressed interest in the property, but only Maverick showed up for the auction.
Maverick credit-bid $100,000 and took control of the site. Chetrit claims a recent appraisal valued the property at more than $140 million.