Three Nolita mixed-use properties owned by Edmond Li’s Veracity Equities are slated for a foreclosure auction as the firm struggles to repay a $41 million loan.
The loan on the portfolio — 31 Prince Street, 46 Spring Street and 48 Spring Street — is now more than 121 days delinquent, according to Morningstar. Their appraised value has dropped from $66 million when the loan was issued in March 2018 to $49.5 million.
A January analysis by Fitch said a property tax increase and a rent shortfall from retail tenants drove the portfolio’s debt-service to coverage ratio down to 0.22 for the first half of 2022, meaning building revenue was covering barely a fifth of the loan payments. PincusCo first reported the court ruling that set the auction date.
All three properties are walkups and have a combined 48 residential units — only six of which are rent-regulated — and eight retail spaces.
Trouble began for Veracity at the onset of the pandemic, during which retail and residential occupancy slipped to 75 percent and 91 percent, respectively. The loan was transferred to a special servicer in December 2020, and despite occupancy rates rebounding, it’s been in various stages of delinquency ever since.
Rialto Capital Advisors, the special servicer on the loan, filed pre-foreclosure papers last July.
The floundering portfolio is but one of Veracity’s headaches. Pre-foreclosure actions have been filed by lenders against another six of the firm’s properties: 153 Elizabeth Street, 199 Lafayette Street, 26 Prince Street, 29 Prince Street, 137 Thompson Street and 111 Mercer Street. According to Pincus, two are in receivership.
Veracity did not immediately respond to a request for comment.
The Manhattan-based firm lists 16 properties on its website, all with glowing descriptions, including of the ones targeted by lenders.
One of the three slated for auction, 48 Prince Street, was Veracity’s first purchase, way back in 1994. The site says the turn-of-the-century building is “home to the famous Spring Lounge” and features modernized luxury apartments and “the famous John Fluevog shoes” in the ground-floor retail space.
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