Once the most expensive apartment in New York, “Le Penthouse” has been put into bankruptcy.
If that sounds familiar, it’s because Yitzchak Tessler previously filed bankruptcy papers in June for the penthouse and several other unsold units in his condo development at 172 Madison Avenue.
This newest filing comes from Madison 33 Owner, the entity that owns the actual remaining unsold units. The June filing had come from Madison 33 Partners, an LLC with an ownership interest in Madison 33 Owner.
The shell games have not dissuaded creditor ArcPe, which began a UCC foreclosure proceeding Thursday. The distressed debt investor is trying to recoup nearly $63 million in debt from a mortgage it purchased in January.
Tessler, in a rare interview, fired back at ArcPe, calling it “a ruthless company — all they do is buy loans and foreclose.”
His filing said the debt had been paid down to $32.5 million. Asked about ArcPe’s demand for twice that amount, Tessler said, “They can go fuck themselves.”
ArcPe managing partner David Gordon stated, “The unpaid principal balance speaks for itself. We are 100 percent certain that our numbers are correct.” His filing put the unpaid principal at $44 million, then added regular interest and default interest.
“We’re happy to work out all non-performing debtors on the amounts that they owe,” said ArcPe managing director John Olsen.
ArcPe had tried to foreclose on the unsold units in April, but Tessler put in the initial bankruptcy filing minutes before a scheduled auction. Jonathan Pasternak, an attorney representing both 33 Madison entities, said the original filing was submitted to “preserve managerial control over the project.”
Attorneys for an ArcPe affiliate filed a motion to dismiss that case, which has been adjourned until September.
The developer’s most recent filing valued the unsold units — consisting of five unfinished units, five penthouse units and two commercial units — at over $100 million. It would cost roughly $13.5 million to renovate the penthouse units “before they can be sold at optimum value,” the filing claimed.
Pasternak said the goal of Tessler’s latest filing is to allow the developer to complete the unfinished units and sell the two commercial and five residential units.
At the time of the April foreclosure, ArcPe’s Gordon intimated that the developer’s overpricing of some units might account for their failure to move. Tessler said he used two major brokerage firms to appraise the units.
The 72-unit development has sold 60 units for nearly $163 million. But the most important one did not sell.
“Le Penthouse” is the crown jewel of the 33-story property. It hit the market in 2019 at $98 million, the city’s most expensive listing at the time. The initial plan for the unit called for 11 bedrooms, 14 bathrooms, a pool and jacuzzi across five stories. Tessler dropped the asking price to $76 million in 2020 but it still didn’t sell.
“He’s had three or four years to sell everything and he’s sold nothing,” Olsen said.
Tessler had scored a condo inventory loan for $164.3 million in 2017 after selling roughly 60 percent of the units. He refinanced the unsold units in 2018 with $94.5 million from Deutsche Bank, which declared a default in February 2022. Deutsche Bank sold the loan to ArcPe in January of this year.
Since the 172 Madison project began in 2015, it has run through three sales teams. Keller Williams NYC initially led sales efforts, followed in 2017 by Compass, which resigned the following year. At the time, sources told The Real Deal that the brokerage departed because of Tessler’s aspirational pricing.
Corcoran took over most of the open listings in 2018.
This article has been updated with comments from Yitzchak Tessler and John Olsen.
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