Eli Karp Sues Greystone, BBG

Eli Karp is suing the lender and appraiser of his foreclosed Hello Lenox apartment building, alleging they intentionally overvalued the Brooklyn property.

Karp is accusing a Greystone affiliate and real estate valuation firm BBG of engineering a “loan-to-own” scheme that he says cost him his flagship property, per a lawsuit filed Monday in New York State Supreme Court. Karp alleges that Greystone, led by founder and CEO Stephen Rosenberg, conspired with BBG to dramatically inflate the value of his newly-built apartment complex at 271 Lenox Road in East Flatbush, per the suit

The inflated valuation, the suit claims, was used to lure Karp into a $34.5 million bridge loan that ultimately set the stage for a foreclosure. According to the complaint, BBG appraisers valued the 55-unit property at $46.2 million in 2019, an appraisal Greystone allegedly commissioned and paid for. Relying on that figure, Karp personally guaranteed the loan, which was intended to refinance construction debt and buy him time to sell the building, per the suit.

As the loan’s maturity approached, Karp couldn’t refinance the debt and defaulted, the suit says. Adding fuel to the allegations, BBG issued a second appraisal in 2024 valuing the same property at $29.6 million, a $16.6 million drop from the 2019 figure. Karp claims in the suit that the swing can’t be explained by market conditions alone and instead proves the earlier appraisal was fraudulently inflated.

The property was ultimately sold at a foreclosure auction for $10 million to the Greystone affiliate. Karp is now on the hook for a $15 million personal guarantee.

“All of this stems from a fraudulent appraisal and a loan that never should have been entered into,” Karp’s attorney Muriel Raggi said.

Karp is seeking at least $16.6 million in damages tied to the alleged appraisal inflation, along with $122 million against Greystone and Rosenberg, alleging they cost him other opportunities by locking him into an exclusive loan letter of intent on other properties in his portfolio.

Representatives for Greystone did not immediately respond to a request for comment. BBG declined to comment, saying they had not yet seen the suit.

Once a rising Brooklyn developer known for his sleek, “Hello”-branded luxury rentals, Karp saw his empire unravel after his projects fell into distress. He has blamed Madison Realty Capital for buying his debt and piling on default interest (a charge the firm disputes) as foreclosures and bankruptcies swept through his portfolio.