Eretz Group staves off foreclosure at Garment District office building

As office distress continues to mount in New York City, Eretz Group has scored a win at its Garment District building.

Abraham Talassazan’s firm locked down a 28-month extension and refinance on $34 million in CMBS debt backed by 252 West 37th Street, staving off foreclosure. The loan fell into special servicing in October.

Wells Fargo sued the Eretz Group and its principals in April on behalf of CMBS bond holders, seeking to foreclose on the 1920s office building. Meanwhile, Eretz Group continued to negotiate with the loan’s special servicer, LNR Partners, a company spokesperson said.

The firm is now turning its attention to leasing out the gut-renovated 164,000-square-foot building, the spokesperson said. The occupancy rate at the 17-story Class B building plunged over the last decade to 62 percent as of September, down from 100 percent in 2014, according to Morningstar.

The Eretz Group purchased the building in 2007 for $33.7 million and took out a mortgage for about the same amount, according to property records. It refinanced in 2014 with a $41 million mortgage from Cantor Commercial Real Estate, which packaged it into a commercial mortgage-backed security. Talassazan guaranteed the loan, according to court documents.

The firm is still facing trouble at a Midtown office building. Soros Fund Management, asset manager for billionaire investor George Soros, filed a foreclosure lawsuit against the Eretz Group in April at 224 West 57th Street.

Soros claimed that Eretz defaulted on a $145 million mortgage; the lender is looking to take the title of the building in order to pay off Eretz’s debt.