Once again, ERFA’s President, Alan Kersh, was featured in the news: this time, in The Wall Street Journal. The WSJ looked into the bankruptcy/foreclosure battle between the developer Bauhouse and its lenders, and spoke with him about the project.
Controversy over the project started as soon as its existence became public in March 2015…
The Sutton Place tower’s sheer scale—with 78 floors it would reach far higher than surrounding buildings—and location in the middle of a narrow residential street not far from Billionaire’s Row, drew immediate backlash from the community.
“It caught everyone by surprise,” said Alan Kersh, president of the East River 50s Alliance, which has been fighting the tower since it was first proposed last year, calling it “wickedly out of character and out of scale with our neighborhood.”
This megatower is not a done deal. We keep repeating this because it’s still true. Much as Bauhouse Group likes to boast that its megatower will go up, regardless of community wishes or zoning changes, there are signs that the construction of the development is far from ensured. The developer claims that our proposed zoning change cannot possibly pass through all the needed governmental approvals before the building goes up, but Bauhouse still doesn’t have the money it needs for the project. In fact, it owes a debt of $128.8 million to Gamma Real Estate, which is taking steps to foreclose on it. You can read more about the impending foreclosure in our latest news post.
Crain’s, The Real Deal, and Curbed all recently reported that not only is the Bauhouse Group having trouble funding the Sutton Place project, but Gamma Real Estate, which already lent the developer $128.8 million is taking steps to foreclose on their debt. All three articles mentioned ERFA and our rezoning plan to stop the development.
The developer of a proposed supertall condo tower in Sutton Place that has drawn opposition from residents in the tony Manhattan neighborhood is facing foreclosure by one of its lenders.
Gamma Real Estate, a real estate investment and lending firm operated by N. Richard Kalikow, has started to take steps to seize the project, located at 426-432 E. 58th Street and owned by Bauhouse Group.
Gamma holds as much as $128.8 million in loans against the property, according to both its website and city property records, including mezzanine debt—loans that some developers obtain on top of a senior mortgage. The debt can be risky because they allow lenders to foreclose quickly. According to Stephen Meister, an attorney who represents Bauhouse in the foreclosure action, the Gamma debt expired last month.
Gamma Real Estate is making moves to foreclose on Bauhouse Group’s troubled supertall planned for Sutton Place.
Bauhouse’s $128.8 million in loans expired last month, spurring the lender, Gamma, to begin the process of seizing 426-432 E. 58th Street, Crain’s reported. The developer argues that foreclosure is premature.”
Bauhouse’s Joseph Beninati has been trying to raise money for the project, which apparently now has a name: Sutton 58, but there are potential issues to overcome. As Crain’s points out, one is an excess of high-end residential units. Another is a proposal from the East River Fifties Alliance to impose a 260-foot height cap.