After a bizarre bankruptcy delayed a South Williamsburg condo project designed for Hasidic families, its lender is getting out.
DW Partners sold its $25 million loan on the luxury development at 415 Marcy Avenue. An entity connected to Cirrus Real Estate, led by former Fortress global head of real estate Anthony Tufariello, bought the loan, according to property records. PincusCo first reported the news.
The 25-unit condo project, which dates back to at least 2015, hit a snag in 2021 when DW initiated a foreclosure, alleging developer Ezra Unger defaulted on the loan.
Complicating matters, the previous property holder, local bakery owner Aron Lebovits, claimed he was the true owner and sued Unger, alleging that he took advantage of “simple people without any real education.” That stalled the foreclosure.
But Lebovits couldn’t post a $1.5 million bond demanded by a judge and the foreclosure resumed. Lebovits tried to file another lawsuit, but the judge dismissed it.
In January, a day before the foreclosure sale was set to occur, an unexpected bankruptcy petition stopped the proceedings. It was not by the developer, Unger, but by Lebovits.
In his filing, Lebovits claimed that Unger “systematically looted Lebovits’ property using a series of fraudulent and forged documents.” He also alleged the loan from DW was fraudulent.
In another unusual move, Lebovits provided granular details about who paid the legal costs for the bankruptcy filing. Various relatives of Lebovits’ chipped in a few thousand dollars apiece, nearby Congregation Beis Nusen provided $5,000 and Regal Management Services contributed $15,000.
Unger did not seem to appreciate the reprieve from foreclosure. Through his attorney, he argued that Lebovits had no right to file for bankruptcy because he was not the debtor. Unger also denied Lebovits’ allegations of fraud, claiming Lebovits had already been paid millions of dollars over the years.
Unger further alleged the bankruptcy was invalid because Regal Management, owned by Yehuda Arye Miller and Berish Schwimmer, was prohibited from preventing the completion of the project because of a judgment in religious court against the two men.
DW contested the bankruptcy as well. The lender argued the petition was simply a delaying tactic by Lebovits. The property had been in default on loan payments since 2021 and racked up seven mechanic’s liens, triggering more defaults, according to court filings.
The bankruptcy dispute was sent to mediation. Unger’s attorney said they were close to a deal with the lender to complete the project and sell out the condo units.
The future of the project is unclear. Cirrus, its new lender, could continue with the foreclosure or make another deal with the developer.
The company and its executives did not return requests for comment. Neither did DW.
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Unger filed an application in 2015 to replace a one-story building housing Marcy Garden Supermarket with a seven-story, 19-unit, mixed-use building totaling 18,500 square feet. Next door, at 419 Marcy Avenue, he planned a six-story, 31-unit building, also with ground-floor retail. Google photos show the buildings went up in 2020, but a construction fence was still up in October 2022.
DW was projecting a sell out of around $33 million. It banked on the property’s location and the developer’s close ties to the Satmar community, according to an memorandum in 2019. The property was designed to meet the Satmars’ needs, including a Passover kitchen, uncovered outdoor space for Sukkot, and units for large families.
DW said a foreclosure scenario would put the sale of units to the “insulated Hasidic community” at risk. It said it could turn to a strong network of Hasidic real estate developers, including Yoel Goldman’s All Year Management and Isaac Hager’s Cornell Realty, to complete a sellout if things turned for the worse.
The new lender, Cirrus, is led by Tufariello, who was previously managing partner of the Versant Group. Embattled developer HFZ Capital’s Ziel Feldman and its former principal Nir Meir claimed to have large stakes in Versant. Tufariello, Feldman and Meir also invested in another real estate investment firm, Allegiant Capital.