Lender Moves to Force Sale of 111 East 59th Street After $193M Default
By Celia Young October 5, 2022 5:06 pm
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A forced sale might be in store for the Upper East Side retail and office building at 111 East 59th Street after its owners defaulted on their loans, according to a lawsuit filed Tuesday in New York County Supreme Court.
LoanCore Capital sued 111 East 59th Street JV Sub and Dune Real Estate Partners for allegedly defaulting on $193.4 million in loans that LoanCore lent on the property between Park and Lexington avenues, according to the suit.
The lender wants to force the landlords to sell the building — currently leased to Premier Medical Group and a cashier-less Starbucks outpost — to pay off the debt along with interest, late fees and the legal bills, according to the suit.
Princeton International Properties, Dune and Empire Capital Holdings bought the 15-story building for $170 million in 2015 from the blindness advocacy nonprofit Lighthouse International with plans to turn it into a medical facility and enclose the first two floors in glass to attract a retail tenant, according to The Real Deal and Empire’s website. Princeton and Empire exited ownership of the property in 2018, according to the suit and Princeton. Dune, Empire, LoanCore and LoanCore’s attorneys did not immediately respond to requests for comment.
The investors got plenty of cash from LoanCore to do so. In 2017, LoanCore provided a $154 million senior loan, a $25.5 million mortgage and $16.5 million in financing to consolidate previous debt and fund the renovations, property records show.
That $196 million in debt has come back to bite the landlords, who allegedly defaulted after failing to pay off the interest on the loans in September 2020, according to the filing. But the building faces more than just a heavy debt burden. The project was hit with a partial stop-work order in June after its plumber’s insurance expired and the temporary certificate of occupancy for the first six floors expired in March, New York City Department of Buildings records show.
Update: A previous version of this story incorrectly listed Princeton and Empire as owners in the building, when the two firms exited ownership in 2018.
Celia Young can be reached at cyoung@commercialobserver.com.
