update4u.net- 15 July 2023
A foreclosure auction is scheduled for a block of 21 unsold units in the Oosten condominium, presenting an opportunity with certain conditions.
The auction, to be held on July 25, involves the ownership stake controlling these luxury apartments, following a default on a $45 million loan by the Chinese developer of the Williamsburg project. However, complications with the condominium board may impact the allocation of the sale proceeds.
According to court documents filed by attorney Richard Shore of Nixon Peabody, the sale proceeds from the 21 units would be sufficient to cover the $36 million owed by XIN Development Management East’s ownership entity on the loan as of June 5. Shore did not provide any further comments on the matter.
The loan was initially granted by an Israeli lender and was later acquired by First Realty Capital Holdings in November 2022. First Realty Capital Holdings is now pursuing the UCC foreclosure, with attorney Avery Mehlman at Herrick Feinstein representing their interests. The auction itself will be handled by Greg Corbin of North Point.
Designed by renowned Dutch architect Piet Boon, the 216-unit Oosten condominium was the first of its kind in the United States. Developed by XIN, the U.S. branch of Xinyuan Real Estate, the project was situated on the Williamsburg waterfront in 2015. With a projected sellout value of $372 million, it stood as one of the most expensive condominiums in Brooklyn at the time. The full-block development at 429 Kent Avenue boasts features such as an interior garden, a roof deck, and a spa.
Despite its initial promise, the project has encountered numerous setbacks. However, it appears that approximately 90 percent of the units have been sold at present.
Xinyuan purchased the site for $54 million in 2012 and enlisted Halstead Property Development Marketing the following year to oversee sales. In 2015, Xinyuan filed a $10 million claim against Wank Adams Slavin Associates, the project’s designer.
Former general contractor Wonder Works Construction also sued Xinyuan in 2017 for $20 million, alleging improper termination. In addition, one dissatisfied buyer filed a lawsuit against the Chinese firm.
In an effort to address concerns regarding its New York projects, Xinyuan handed management responsibilities over to Xin Fu Development in December 2017. This move established a joint venture with Kuafu Properties.
Following the transition, Halstead sued in 2018, claiming that the developer owed the company nearly $1.3 million. The lawsuit was settled in 2020, and the suit brought by Wonder Works Construction was resolved the following year.
However, the Oosten condominium has continued to face legal challenges, with the condo board accusing the construction team of defects and non-payment of common charges, among other issues.
Jeffrey Metz, the board’s attorney from Adam Leitman Bailey’s firm, has filed a request with the Appellate Division for a temporary restraining order. This request aims to ensure that the proceeds from any sale are placed into escrow to satisfy the board’s claims. The condo board has previously sued to collect on a previous settlement.
Allegations of poor construction and multiple leaks were resolved in a settlement with the developer in June 2022. As part of the settlement, XIN agreed to transfer a unit worth $944,000 to the board by the end of the previous month for the purpose of accommodating an on-site resident manager. Additionally, the board was to receive five handicapped parking spaces valued at $325,000.
While the board did receive $3.4 million from the settlement, it took control of the parking spaces when the apartment was not transferred as stipulated. Now, the board is seeking funds from the UCC foreclosure to purchase the manager’s unit and cover $40,000 in attorney’s fees.
Adding to the complexity of the situation, several of the 21 units that serve as collateral for the $45 million mortgage are under contract with buyers, according to StreetEasy. These apartments, which could potentially yield around $58 million from the deals, are also subject to liens totaling nearly $100,000 in unpaid common charges.
The condo board has suggested the possibility of the court appointing a receiver and allowing the sale of units under contract, with the proceeds being placed in escrow until the resolution of their lawsuit.
Although three units were initially scheduled for sale to other parties on June 16, 2023, the board obtained a temporary stay on June 15. While the stay was lifted on June 29, the board is now requesting a new restraining order, and the sales have yet to take place.
An affidavit filed by XIN’s Jane Weng opposing the stay of those sales stated that $8 million in expected proceeds were to be paid to the lender, KM 429 Kent Avenue US Financing.
The board remains concerned that whoever acquires the 21 units in the foreclosure sale may not honor the remaining terms of the settlement with the original developer.
if you like more about investment, you can click following link