Stellar Management, City Urban Realty Face Foreclosure at 243 Canal Street

Stellar Management and City Urban Realty might lose their six-story office building on the border of Manhattan’s Little Italy and Chinatown.

Stellar and City Urban are facing foreclosure at 243 Canal Street after allegedly defaulting on a $21 million loan for the property, according to a filing this week in New York State Supreme Court.

Loan servicer Rialto Capital Advisors, through the entity Sig Cre 2023 Venture, filed the pre-foreclosure action against the two developers, which used the entity Canal Street Ventures, after sending a notice of default in August, records show.

Stellar and City Urban bought the 21,700-square-foot office building between Centre and Lafayette streets in a joint venture in 2016 for $25 million, at the time using an $18.5 million loan from Bank OZK, according to PincusCo, which first reported the news.

Then, in 2019, the developers refinanced the building through a $21 million loan from the now-defunct Signature Bank, which regulators shut down in 2023 due to heavy exposure to cryptocurrency, as Commercial Observer previously reported.

Rialto then took over servicing on Signature’s $17 billion loan book in a joint venture with Blackstone and a subsidiary of the Canada Pension Plan Investment Board.

Spokespeople for Rialto, Blackstone, Stellar and City Urban did not immediately respond to requests for comment.

Current tenants of 243 Canal Street include jewelry store Sang’s Jewelry, self-storage facility Local Locker Storage and a branch of Santander Bank.

News of the potential foreclosure comes after a busy few months for City Urban.

In February, the firm acquired a residential building at 244 West 72nd Street on the Upper West Side from Empire Management for $40 million, as CO previously reported.

And, last month, City Urban bought the retail building covering 61-63 North Sixth Street in Williamsburg, Brooklyn, for more than $33 million — just one week after selling three retail properties along the popular shopping street to Acadia Realty Trust for a total of $60 million, CO reported.

Isabelle Durso can be reached at idurso@commercialobserver.com.