Thursday, August 13, 2015

Co-Owner Of Troubled NYC Development Project Buys Out Its $44.4 Million Mortgage, Then Begins Foreclosing On Itself In Effort To Financially Squeeze Out Unwanted Partners & Snatch Site For Itself

In New York City, the New York Daily News reports:
  • A Chinese private equity firm with plans to build a gleaming 47-story condo and hotel tower on an empty lot near Hudson Yards is now making moves to force the foreclosure of that very same site.

    Kuafu Properties, which has been arguing with its partners over finances and negative publicity, has made the unusual move, through an affiliate, of acquiring a $44.4 million loan granted to the project by banking giant UBS and is now filing to foreclose on itself and its partners, citing a loan maturity default, the Daily News has learned.

    If successful, Kuafu could force a public auction of the property and then potentially submit its own bid to purchase it for a second time - without its current partners, Blackhouse Development and Siras Development.

    In that case, it would have to outbid potential competitors.

    Kuafu officially filed to foreclose on the property, at 462-470 11th Ave. and 554 W. 38th St., July 10 in State Supreme Court, according to public documents.

    When contacted by the Daily News, Kuafu said it had moved to acquire the loan after learning that UBS had been approached by other investors looking to buy it in a bid to gain control of the property.

    "After learning that 'loan to own' investors were attempting to purchase the UBS mortgage loan, an affiliate of Kuafu acquired the loan at par and is now proceeding with a foreclosure process that will be conducted so as to maximize value for all investors," said a spokesman for Kuafu.

    He declined to comment further on Kuafu’s plans.

    Kuafu and its partners had plans to build a massive, 380,000-square-foot residential and hotel project known as Hudson Rise but the project stalled after the partners began to clash. Kuafu claims that Blackhouse CEO Sean Ludwick spooked the investment community after press reports that he’d allegedly drawn lewd illustrations on murals in his ex-girlfriend’s apartment.

    It also claimed that Ludwick had shown questionable financial judgement and that Siras had gone behind its back to ink an exclusive arrangement for brokerage Compass to sell the apartments without its knowledge.

    Spokespersons for Blackhouse and Siras didn’t immediately respond to requests for comment.

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