Eli Karp’s Flatbush apartment project has just greeted new owners.
Jeff Simpson’s Arch Companies, the property’s mezzanine lessor, won a UCC foreclosure auction for Karp’s Hello Nostrand equity stake, according to sources familiar with the matter. We are making good progress in maintaining the site.
The development at 1580 Nostrand Avenue was at the center of one of the most heated Brooklyn real estate battles in recent memory.
Greg CorbinRosewood Realty’s head of bankruptcy and restructuring spearheaded the sale.
Karp’s Hello Living purchased the site for $13 million in 2014 with plans to build an apartment complex.
However, once construction began, he ran into trouble with the lender. He pointed out his one in particular. Madison Realty CapitalIn the lawsuit, Karp alleged that Madison “artificially defaulted” on his loan in order to raise interest rates to 24%.a website painted madison real estate Josh Segen Karp never explicitly acknowledged being behind it, but a comic book villain showed up.
Madison Realty denied Karp’s allegations, arguing that it was a responsible lender enforcing its rights. A judge ruled in Madison’s favor and dismissed Karp’s case.
Karp plans to sell the property, which includes a completed 93-unit building and an unfinished development. bankruptcy in December to stop the foreclosure. This tactic could be used to buy time to find relief funds or sell properties, but Karp did neither.
Madison sold the property’s $6 million mezzanine and $73 million senior loan to Arch Companies in March. Four months later, a judge dismissed the bankruptcy action and the foreclosure was reopened.
There are some hurdles to clear before you can get Arch. The lender alleges that Carp entered into a master lease with another tenant without court consent that would allow Arch to qualify for his 421a tax credit, according to a lawsuit filed by the lender. You won’t be able to.
In addition to losing 421a incentives, master tenants have already listed and rented apartments on the property, according to Arch Companies’ court filings.
“Simply put, the tenant and the main tenant conspired to steal the security deposit and rent while the foreclosure was pending,” Arch’s lawsuit alleges.
Karp’s attorneys allege Arch knew of the master lease agreement months earlier.
Matthew Mannion of Mannion Auctions was the auctioneer for the auction.
Karp and his attorney were unable to return requests for comment. Arch Companies also did not return requests for comment.