Meltdown: Nightingale defaults on another loan

Elie Schwartz’s firm stops paying $30M debt, and bank sells it

Elie Schwartz’s Nightingale Defaults on Midtown East Loan
Elie Schwartz and 20 East 46th Street (LinkedIn, Google Maps)

Elie Schwartz’s list of bad real estate deals keeps getting longer.

Schwartz’s Nightingale Properties defaulted on a $30 million loan backing an office property in Midtown East, The Real Deal has learned.

The company got the financing from East West Bank in 2016 when it bought the leasehold on the 15-story building at 20 East 46th Street for roughly $28 million. The ground lease, purchased from Gary Barnett’s Extell Development, reportedly had 27 years remaining.

Nightingale defaulted earlier this year. East West had already put the debt up for sale by mid July, when Schwartz was engulfed by scandal, according to Alex Fuchs at Rosewood Realty Group, who arranged the sale. Nightingale was accused of misappropriating tens of millions of dollars from small-time investors on the crowdfunding platform CrowdStreet.

The buyer of the debt was a partnership between Klosed Properties and the Namdar Group.

Representatives for Nightingale, East-West Bank, Klosed and Namdar did not respond to requests for comment.

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At the time Nightingale defaulted, the balance of the loan had been paid down to $26.2 million, said Fuchs, who declined to reveal the price Klosed and Namdar paid. Rosewood’s Ben Khakshoor helped broker the sale.

The deal is the latest domino to fall for Nightingale, which has suffered a series of defaults as the scandal around Schwartz has intensified.

Last month, Nightingale’s lender in the Financial District, Howard Marks’ Oaktree Capital Management, filed to foreclose on 111 Wall Street, which Schwartz and partners had  bought for about $395 million.

In Soho, Nightingale had been facing foreclosure on its office and retail property at 300 Lafayette Street. The company’s partner on that deal, Intervest Capital Partners, bought the defaulted note, which put an end to the foreclosure process. It’s not clear how the tumult has affected Nightingale’s stake in the property.

Nightingale is facing foreclosure on the Whale Building in Brooklyn and struggling with properties in Philadelphia and Chicago.

The independent manager representing the CrowdStreet investors whose Nightingale investment went missing recently revealed that the Department of Justice and Securities and Exchange Commission are both investigating.

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