Developer Blames Lender for Newark Trouble

The Lakewood-based development group behind a massive three-tower development in Newark alleges their lender stopped funding the project.

An entity tied to Acier Holdings filed a lawsuit in New Jersey state court claiming the project’s lender Parkview Financial is undercapitalized and is failing to fund their project known as The Halo. The towers will become some of the tallest buildings in Newark, reshaping the city’s skyline.

The developer further alleged in the lawsuit that Parkview’s CEO told the development group that 70 percent of Parkview’s loans are non-performing.

But Parkview’s CEO Paul Rahimian strongly denies the allegations.

“It is not true that 70% of our loans are non-performing and we have no idea why they would make up a false statement that is so easy to prove otherwise,” said Rahimian in an email.

Rahimian claims the reality is that the borrowers have been in default for months.

“We had numerous conversations with them about their default and we sent them a letter regarding our intent to foreclose the asset,” said Rahimian in an email. “Only then did they file a lawsuit – as a preemptive move against a pending foreclosure action.”

Rahimian said the borrowers are repeat borrowers and he likes them on a personal level, but they got delayed with their construction timeline and their interest reserve was out of balance.

He also said Parkview planned to sue and foreclose on the property for the owners’ continued breach of their obligations.

TAPInto Newark was the first to report on the lawsuit.

The project’s delays were brought up in a city council meeting in late June. The city council had previously approved a 30-year tax abatement for the project, which requires the project to have an affordable housing component.

The project has been at the center of union protests, according to Jersey Digs.

Acier secured a $90 million construction loan from Parkview in 2022 to build the towers near Downtown Newark.The building’s sleek design mirrored luxury projects in Miami or New York City.

“We decided that the time is ripe for Newark to have a project built on par with major international cities such as London, Tokyo and obviously New York City,” Acier said in a statement in 2022

The developer alleges problems became evident with the lender in early 2023 as construction on the first tower neared completion. According to the complaint, Parkview stopped funding the loan disbursements, which remain outstanding over a year, causing delays in construction.

“We expect that the courts will compel the lender to act appropriately and award our clients the damages its failures have caused,” said Christopher Milito of Morrison Cohen, attorney for the developer.

It is not uncommon for borrowers to cry foul when a lender initiates a foreclosure to seize the asset. These types of allegations are especially common in today’s market, where higher interest rates have made it more difficult for developers to cover the cost of debt, pushing lenders to foreclose.

Parkview, based in Los Angeles, launched a debt fund in 2015 that has originated over $4 billion in construction financing.

The private lender faced allegations similar to Acier’s for failing to fund a loan on a Brooklyn project. An affiliate of developer Boruch Singer sued Parkview this year for failing to fund a loan on Singer’s 10-story retail and office complex in Brooklyn’s Midwood neighborhood.

Parkview’s Rahimian denied any wrongdoing at the time.

“We put the loan into default after interest payments were missed,” Rahimian said. “We kept our end of the bargain. Cost overruns at the project have caused delays.”