Chetrit Group Defaults on $8M Loan at LES Residential Development Site
By Isabelle Durso September 19, 2024 5:07 pm
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The Chetrit Group might lose its residential development site at 265-275 Cherry Street in the Lower East Side’s Two Bridges neighborhood after defaulting on an $8 million loan, a source familiar with the matter told Commercial Observer.
Madison Realty Capital, which provided the mezzanine loan and a $63 million mortgage that developer Joe Chetrit used to finance his acquisition of the property, is now filing for a UCC foreclosure, the source said.
As part of that foreclosure process, Madison can make notice of the default and head straight to an auction, with the winning bidder taking over Chetrit’s property as well as the mortgage and mezzanine loan, the source said.
All bids must be submitted by Nov. 18, and the auction will take place on or soon after Nov. 20, according to marketing material by Meridian Investment Sales shared with CO. Meridian’s David Schechtman, who is handling the foreclosure and auction, declined to comment.
A spokesperson for Madison declined to comment, while Chetrit could not be reached for comment. The Real Deal first reported the news.
Chetrit bought the site just east of the Manhattan Bridge from CIM Group and L+M Development Partners in 2022 for $78 million, thanks to Madison’s financing. The developer had plans for a two-tower apartment project on the property with 1,313 residential units, according to Meridian.
Chetrit’s land at Cherry Street is one of four development sites along the East River, totaling 1.1 million buildable square feet, the source said. The property sits adjacent to several Lower East Side apartment towers owned by Gary Barnett’s Extell Development.
Those include Barnett’s 851-unit apartment building at 252 South Street, called One Manhattan Square, and his residential site at 259 Clinton Street, which he bought last year for $40 million with plans for a 61-story, 765-unit tower, TRD reported.
Developers including Barnett and Chetrit have faced delays on their residential projects in the area after locals and City Council members pushed back against the towers’ construction.
Chetrit’s latest financial woe comes after his group’s Hudson Yards site at 545 West 37th Street faced default on an $85 million loan package in February 2023, as CO previously reported. And the following March, Chetrit sold its building at 850 Third Avenue at a $156 million loss to its lender HPS Investment Partners.
Isabelle Durso can be reached at idurso@commercialobserver.com.
