Hungerford, Haruvi Face Foreclosure on Loans Worth $173.4M

Two of New York’s most prominent multifamily landlords have been hit with two foreclosure suits targeting their portfolios.

Lenders filed for foreclosure on two portfolios connected to investors Peter Hungerford and Arthur Haruvi. The portfolios together comprise 31 multifamily buildings in Manhattan. Entities associated with Hungerford and Haruvi took out a total of $173.4 million in loans against the two portfolios, but didn’t pay them back by their June maturity date.

Hungerford said he was “shocked” the lenders filed the suits, saying the investors were in the midst of negotiating mezzanine financing and an extension to the loans.

“I can’t comprehend why they chose to do this,” Hungerford said. “I hope we can come up with a reasonable agreement to push forward with the extension and the mezz agreement that we’d already fully negotiated.”

Rialto Capital Advisors, a special servicer associated with the plaintiffs on one of the cases, has gained a reputation for using scorched-earth tactics on a number of borrowers, The Real Deal reported earlier this year. The servicer has previously maintained it is playing by the rules and only goes after borrowers in “rare instances.” An attorney for the plaintiffs did not immediately respond to a request for comment.

The investors have been ready to refinance the portfolio Rialto was servicing, Hungerford said, but family legal disputes have gotten in the way. In 2022, Haruvi reorganized the family assets. He brought in Hungerford to take on a stake and manage the portfolio. But Michelle Haruvi, Arthur Haruvi’s daughter, sued her father and Hungerford, alleging she had been unfairly cut out of the family companies. The case was initially dismissed but revived on appeal. Arthur Haruvi could not immediately be reached for comment.

“I, as the sponsor and manager of this deal, have done an excellent job managing the properties and improving the condition of the properties,” Hungerford said. ”But because of the family disputes, we’ve been unable to refinance.”

Hungerford and Haruvi are named as defendants in the suits because they served as limited guarantors on the loans. The lenders are seeking judgments to collect at least some losses from Hungerford and Haruvi personally if portfolio sales don’t cover the debt, alleging the two are liable because the borrower failed to make certain deposits. Hungerford, however, said the property is worth more than the loan.

The investors’ Midtown West portfolio, serviced by Rialto, comprises 18 buildings in the blocks between West 54th and 57th streets, and between Eighth and Tenth avenues on the West Side. The other portfolio is made up of 13 buildings across the Upper East Side, Upper West Side and Murray Hill. Notes on the two portfolios, which include rent-stabilized units, were both transferred to the plaintiffs in February.

Hungerford has become one of the city’s most well-known multifamily landlords for his strategy of buying up rent-stabilized buildings. The buildings have been considered deteriorating assets by many in the industry after statewide legislation made it harder to raise the rents in regulated apartments. With buildings selling at a fraction of their peak prices, investors like Hungerford have swooped in, believing they can hold on long enough to make a profit.