Another one of Eli Karp’s Flatbush properties is hitting the auction block in a bankruptcy sale.
Karp is unloading a vacant lot and an adjacent multifamily building where he once planned a sprawling two-building development called Hello Nostrand.
Karp only finished one of the buildings – a 93-unit rental building at 21 East 29th Street. It’s being auctioned along with the undeveloped property at 1580 Nostrand Avenue, according to the listing from Northgate Real Estate Group.
The 97,000 square foot Flatbush building has floor-through apartments with front and back terraces and has a 421a property tax exemption.
“This asset has attracted significantly more interest than most of the 35 bankruptcy and foreclosure deals we’re handling, thanks to its large scale, substantial average rents and high-end modern units,” said Northgate president and bankruptcy specialist Greg Corbin.
The property has been mired in litigation for years. Karp’s Hello Living bought the site for $13 million in 2014 with plans to build an apartment complex. But as construction started he ran into trouble with lenders.
Karp put the property into bankruptcy to stop a foreclosure by the senior lender, Madison Realty Capital. Madison then sold the $6 million mezzanine loan and $73 million senior loan on the property to Arch Companies, which sued Karp to initiate another foreclosure on the property.
In that suit, Arch alleged the project’s ownership entity improperly entered into a master lease with a tenant that would defer rent payments for months and could disqualify the property from the 421a tax break.
Then Arch ran into trouble of its own, and Karp agreed to the bankruptcy sale.
Karp was once a promising developer who bet on building luxury rental apartments in less gentrified Brooklyn neighborhoods. All of his projects had “Hello” in their names and stood out for their sleek designs, which appeared out of character next to neighboring buildings.
Another Karp property at 2417 Albemarle Road was auctioned last month and went to the lender in a credit bid.
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