Sour towers
developer, whose entire portfolio of buildings is being gobbled up by rival real estate sharks who smell blood in the water. “They would blame the market or construction or the banks or whatever the reason might be to delay delivering [the units] for as long as humanly possible.”
The investor said that he waited more than five years to close on a unit HFZ agreed to provide in exchange for his investment.
HFZ “started making all kinds of excuses as to why they couldn’t close,” they said. Ultimately, “We understood that HFZ had no intention of ever closing on our unit.”
It remains unclear just how many Joe Schmo buyers went down with the ship, but multiple cases involving such deals are currently working their way through the New York court system, and there will likely be additional suits to come, said one source familiar with the dealings, who also requested anonymity.
This source said he knew of roughly 10 individuals who had invested money in HFZ buildings with the expectation of receiving a unit or units in those buildings. He said these investments ranged from $3 to $4 million to more than $10 million.
HFZ took the money but in some cases never delivered the promised units. Now, it’s unlikely these investors will get much, if any, of their money back. That story is repeated again and again in New York state Supreme Court records.
In a lawsuit filed in December of last year, investor Sergey Kostyatnikov claimed to have put $3.8 million into HFZ’s condo conversion the Marquand, at 11 E. 68th St. in Lenox Hill. According to his suit, Kostyatnikov (who, through his lawyer, declined to comment) was entitled to one of two units in the building. HFZ never delivered either of those units to Kostyatnikov but instead agreed to offer him a pair of units at the company’s Upper West Side condo building, the Astor. Per Kostyatnikov’s complaint, he never received those units either.
In another suit, an investor acting through limited liability company Astor Ben Sasha LLC claimed to have put $6.2 million into the Astor in 2014 in exchange for a unit in the building. According to the suit, they have been waiting to take possession of the unit ever since, despite pumping another $1 million into “build-outs and interior work and finishes” for the apartment.
Another LLC, Arel Capital Partners II, is suing HFZ over $7.3 million it claims to have invested in the company’s condo projects 88-90 Lexington, Fifty Third and Eighth and the Astor in exchange for a pair of units at the latter building, which it never received.
Instead, the suit alleges, HFZ refinanced these four buildings and ploughed the proceeds from that transaction into its ill-fated XI project, which was slated to house the city’s first Six Senses hotel (now also indefinitely delayed).
Would-be buyer Jenny Kwan lent HFZ more than $3 million in 2015 with the understanding that the funds could serve as credit toward purchase of a unit at the developer’s Bryant condo building at 16 W. 40th St. Last month she sued the firm for refusing to close on a pair of units in the building while continuing to keep her money.
The problem for these individuals, of course, is that HFZ has gone bust and appears to have neither the money nor the apartments to pony up.
In August, Feldman filed a lawsuit claiming that Meir siphoned up “tens of millions of dollars of HFZ’s money,” blowing the funds on luxuries like a sprawling Hamptons mansion. He called his former partner a “sociopath” 17 times in the court filing and compared him to Bernie Madoff and cult leader Jim Jones.
Meir has denied those claims — but has since liquidated his largest assets. He sold his Hamptons playground to billionaire Robert Kraft for $43 million this year.
Little wonder Feldman is so exercised — as the guarantor on a number of loans HFZ took out to build its projects, he could be on the hook personally for tens of millions of dollars.
He has also begun liquidating his personal real estate holdings.
In January, he sold his Bridgehampton estate at 187 Dune Road for $50 million. Feldman is also trying to unload his penthouse at HFZ development the Marquand. He recently cut his asking price for the 6,200-square-foot pad from $39 million to $35 million.
Representatives for HFZ and Feldman declined to comment, as did Meir’s attorney.
Their real estate empire gone, Feldman and Meir are a reminder that even gold-plated Manhattan property deals can turn sour.