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CIM Group battles HFZ Capital over foreclosure

Mezzanine debt positions tied to four HFZ Capital Group luxury condo buildings in Manhattan are headed for a Uniform Commercial Code foreclosure sale, CO first reported. CIM Group is the junior mezz lender on the assets and triggered the sale.

  • Dig Deeper: The four loans are cross-collateralized and have an aggregate balance of $89.5 million: 88 Lexington Avenue ($25.5 million), 90 Lexington Avenue ($15.6 million), The Astor at 235 West 75th Street ( $38.5 million), and 301 West 53rd Street ($9.9 million). The total capital stack is $258.8 million.
  • Why it matters: Junior mezz lenders run the risk of being wiped out by the senior mezz lender, and therefore move quickly to protect their interests and either take over the project themselves or sell their positions. This typically happens when the lender in the mezz position has a track record as a developer. 
  • Uncertainty looms: Marketing materials show that Newmark is handling the sale of the mezz positions, which represent an indirect interest in the condo properties. Interestingly, a source close to HFZ said that a foreclosure sale would not go ahead.
  • Flashback: In July 2013, HFZ + Fortress Investment Group paid Westbrook Partners $610 million for the four properties. The portfolio consisted of 743 rental units, and the partners began the process of converting the buildings into residential condos. [CO+TRD]

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