Madison Realty Buys Debt to Distressed Staten Island Condo
Daniel Geiger May 30, 2012, 8:30 a.m.
The loan to a troubled Staten Island residential condo building built by the distressed developer Lieb Puretz was sold for nearly half its value sources have revealed to The Commercial Observer.
The investment group, Madison Realty Capital, scooped up the nearly $15 million in debt against 224 Richmond Terrace from lender Bank of New York for roughly $8.4 million.
An investment sales team from the real estate brokerage company Massey Knakal led by the company’s chairman Bob Knakal handled the sale of the 40-unit building’s mortgage. According to marketing materials released by Massey Knakal to prospective buyers, the nearly 60,000-square-foot property, which was built in recent years, still needs interior work, including the installation of appliances.
By buying the debt, Madison Realty Capital can foreclose on the building, finish the remaining construction and either sell or rent out the units. An executive at Madison, Josh Zegen, who was involved in the acquisition couldn’t be reached for comment by press time.
224 Richmond Terrace is one among a number of real estate development projects in Staten Island that Mr. Puretz began during boom times and eventually defaulted on when the recession set in and crushed the economic projections underpinning their viablity.
Among the broken deals was Waterfront Commons, a nearly 400,000 square foot mall that Mr. Puretz was planning. He also fell into foreclosure on a 57-unit condo at 155 Bay Street Landing and a 101-unit conversion project at 130 Bay Street Landing. The notes to those two buildings were also sold by Mr. Knakal. The two loans traded together last year for about $23 million, less than half their $54 million face value, to a company called Meadow Partners.
In 2011, Mr. Puretz was forced to declare bankruptcy, which could impede the foreclosure process on the mortgages tied to his properties and which likely reduced their value.
Observers of Mr. Puretz’s spectacular fall from Staten Island’s biggest developer to one of the borough’s most glaring victims of the bust have hoped that pushing his projects into different hands will restart development in the area.