Bank of Montreal is seeking to appoint an emergency receiver for the late Mendel Steiner’s apartment portfolio in Baltimore, as more information comes to light about Steiner’s financial distress prior to his death.
The lender filed an order in January asking Baltimore’s circuit court to appoint a receiver to take control of the Dutch Village and Pleasantview apartment complexes. Together the properties total about 800 units.
Steiner died by suicide last month at the age of 33. Now lenders are taking action to manage the late investor’s assets.
“With his passing there is an increased risk of mismanagement and deterioration of the properties,” the bank said in its filing.
A picture of Steiner’s rapid ascent and financial troubles preceding his death is starting to emerge through new legal filings. The lawsuit also reveals the ease at which Steiner was able to obtain financing from Bank of Montreal (BMO), who was seeking to securitize the loan.
Steiner ran Aven Realty and owned thousands of multifamily units across the U.S.
His relationship with now-embattled Suffern-based real estate attorney Mark Nussbaum is also coming under scrutiny. The attorney shut down his law firm after a lawsuit alleged he failed to return $15 million in escrow funds. Nussbaum is seeking to dismiss the lawsuit, calling it a “confused mess of scandalous conspiracy theories.” According to Nussbaum’s filing, the $15 million was supposed to go to a Steiner-linked property in Lafayette, Indiana.
But the lawsuit in Baltimore shows another link between Nussbaum and Steiner.
Baltimore
Steiner purchased the Baltimore rental complexes for $115 million in 2022. The buildings were owned by the Kushner Companies for about a decade until Charles Kushner’s firm sold the two properties in 2021 for $69 million.
On January 31, 2024, Steiner scored a $160 million refinancing from BMO for the properties.
Yet, about a month later, BMO had already taken legal action against Steiner and his companies, alleging they failed to provide financial statements and rent rolls. Steiner’s properties allegedly had discrepancies in their rental income, jeopardizing the bank’s ability to securitize the loan, according to the Bank of Montreal.
The lawsuit alleges that Steiner misled the bank, but it also raises questions about Bank of Montreal’s underwriting on the properties.
BMO alleges Steiner provided the bank with a false purchase price. According to court filings, Steiner told the bank he paid $173 million for the properties, but in actuality, he only paid $115 million, the Baltimore Banner reported.
But using Steiner’s alleged inflated numbers, BMO’s math is a headscratcher. The sale price of $173 million is more than double what Kushner sold the property for just three years prior.
At the time, multifamily values had declined because of the Federal Reserve’s decision to raise interest rates. Steiner would have had to raise rents at a remarkable pace in a short period of time in order to make interest payments.
There’s also the rapid speed at which BMO put Steiner into default after it could not securitize the loan.
The lender and Steiner inked the refinancing on January 31, 2024. But by March 7, Steiner was already in default, according to the bank. The situation was allegedly so bad that Bank of Montreal sought to appoint a receiver for the properties later that month instead of allowing Steiner to operate the apartments. It’s highly unusual for a lender to act so quickly to appoint a receiver.
BMO declined to comment.
Nussbaum connection
By May 2024, Steiner and BMO had reached a forbearance, which halted the litigation. Under the terms of the agreement, Steiner had to offload the Baltimore properties.
In July, Steiner claimed to have a buyer lined up. He would sell the properties to Samuel Goldstein of Goldstein EQ Acquisitions for $180 million, documents show. The sale price was large enough to pay off the loan.
The sales document had a notable mention: Steiner’s designated escrow agent was none other than Mark Nussbaum’s law firm, Nussbaum and Lowinger.
But Steiner never closed.
In October, Steiner claimed he would sell the property to Abraham Greenbaum of MD Invest, according to documents reviewed by TRD. Steiner kept pushing the closing back.
Steiner sought to delay the closing until December while BMO required Steiner make additional payments. In May, Steiner paid $5 million, another $10 million in June and July, and in September, Steiner made three payments totaling $2 million, according to BMO.
On January 13, BMO sent Steiner and Nussbaum’s law firm, acting as counsel to Steiner, a notice of default. BMO alleged Steiner failed to complete the sale or failed to deposit escrow money with the lender.
But the default letter likely never reached Steiner. His funeral was held just days before in Borough Park.
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