Robert Khodadadian – The Real Deal
About eight years after construction started, Ian Bruce Eichner’s odyssey to sell out Madison Square Park condo tower was almost complete.
He had settled disputes with his partners and after a sluggish start to sales had sold all but one unit in the 83-unit building.
But now, residents at the noteworthy Manhattan condo have alleged a laundry list of defects, including a life-threatening lack of a firestop, a multimillion-dollar building maintenance unit that never worked, drafty windows and badly installed hardwood floors.
In a lawsuit, the condo board also claims the developer has not secured a permanent certificate of occupancy, imperiling their mortgage agreements and creating a risk that the Department of Buildings will order them to vacate.
The board also alleges the developer and project partners Fortress Investment Group and Dune Real Estate pilfered its assets and walked away with millions of dollars in distributions.
The suit says Madison Realty Capital in 2018 lent the project $167.5 million, which was more than the equity the partners put in, and that the loan should have been classified as an equity investment because Madison seized proceeds from unit sales.
A Madison subsidiary provided the loan, secured by the unsold units, a spokesperson for the lender said. “The loan has been paid down, with one unit remaining from the initial collateral,” the spokesperson said. (That unit is a $20 million duplex.)
Eichner has not responded to the lawsuit and did not return a request for comment.
Lawsuits brought by boards of luxury condos are not uncommon in New York City. Residents at the supertall 432 Park Avenue brought a case alleging faulty elevators and flooding, which the developers called “vastly exaggerated.”
Eichner began the Madison Square Park project by buying air rights from a co-op in the middle of the block before asking the owner of the neighboring building to throw out a price for the assemblage’s first piece of land.
He ended up buying $100 million worth of air rights and seven properties to build the Madison Square Park tower. He snagged $85 million from Fortress and Dune and put in $61 million of his own money before securing $343 million in construction financing from Goldman Sachs.
The 65-story project in the Flatiron District was supposed to be his comeback project in New York after what he called his 15-year “exile to the desert.” Eichner, a New York developer, built the Cosmopolitan casino in Las Vegas before losing it to foreclosure.
Sales for Madison Square Park launched in 2015 to some success; about half of the development’s 83 units were in contract by that October. But when construction finished in the summer of 2017, about a third of Eichner’s units remained unsold and soon Eichner was in danger of losing the project.
He sued his partners, Fortress and Dune, claiming they stopped his efforts to refinance and pushed him to the verge of default. But he avoided that by landing the Madison Realty Capital loan in June 2018 and ended his litigation with Dune and Fortress. Around the same time, condo sales started to pick up.
Eichner appeared to be in the clear, ready to focus on an ambitious project in Miami, when the condo board sued.
The condo board’s attorney did not return a request for a comment. The architect Hill West, which was also named in the lawsuit, declined to comment.
Eichner’s Madison Square Park saga enters final act
Eichner in danger of defaulting on Flatiron condo project: lawsuit
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About eight years after construction started, Ian Bruce Eichner’s odyssey to sell out Madison Square Park condo tower was almost complete. He had settled disputes with his partners and after a sluggish start to sales had sold all but one unit in the 83-unit building. But now, residents at the noteworthy Manhattan condo have alleged
The post Condo board alleges defects at Eichner’s Madison Square Park tower appeared first on The Real Deal. Uncategorized, Flatiron, Ian Bruce Eichner, Lawsuits, Madison Realty The Real Deal
Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.