Another day, another problem for Elie Schwartz’s Nightingale Properties.
A lender at 20 East 46th Street sued Schwartz and Nightingale over a $30 million loan backed by the Midtown East office building.
The lender appears to be the joint venture between Namdar Group and Klosed Properties that purchased the property’s debt in August.
The lawsuit calls on the court to appoint a receiver to immediately take possession of the property as the foreclosure process unfolds.
Representatives for Nightingale, Klosed and Namdar did not immediately respond to requests for comment.
Nightingale defaulted on the $30 million loan backing the Midtown East office property earlier this year. The company received the financing from East West Bank in 2016 when Schwartz bought the leasehold on the 15-story building for $28 million from Extell Development’s Gary Barnett. It reportedly had 27 years remaining.
East West, as lenders typically do, decided to sell the debt rather than foreclose. Rosewood Realty Group’s Alex Fuchs arranged the sale to Namdar and Klosed, helped by Rosewood’s Ben Khakshoor. It’s unclear how much the joint venture paid, but there was a $26.2 million balance on the loan when Schwartz defaulted, Fuchs told The Real Deal several months ago.
Schwartz has been engulfed in scandal this year. His company was accused of misappropriating tens of millions of dollars from small-time investors on the CrowdStreet crowdfunding platform.
Last month, Nightingale reached a settlement to repay investors $4 million per quarter over the next three years, which will force Nightingale to sell parts of its portfolio. Its properties include 111 Wall Street, which Schwartz and partners purchased in 2020 for $395 million. Howard Marks’ Oaktree Capital Management filed to foreclose there in July.
Nightingale also faced foreclosure at 300 Lafayette Street in Soho earlier this year, but avoided that fate when the company’s partner at the property bought the defaulted note. Other sore spots for Nightingale include the Whale Building in Brooklyn and properties in Chicago and Philadelphia.