One of the boldest bets of the past decade on New York City’s high-end real estate market appears to have finally run out of rope — a case study in what happens when big risks don’t pan out.
HFZ Capital Group’s $2 billion XI project on the High Line in West Chelsea is headed for foreclosure after years of hand wringing over its viability, The Real Deal has learned.
The project’s lender, a subsidiary of The Children’s Investment Fund, a UK-based hedge fund, has scheduled a UCC foreclosure sale for October on HFZ’s stake in the mixed-use development, marketing materials show.
Representatives for HFZ Capital, headed by Ziel Feldman, and TCI could not be immediately reached for comment.
The impending foreclosure indicates how far the city’s high-end real estate market has fallen since HFZ bought the site in 2015 for more than $1,000 per square foot — a figure that raised eyebrows for the rose-colored view it represented of the city’s condo market.
But the market was struggling even before the pandemic, and in the past year HFZ has lost control of most of its portfolio to lenders.
In addition to the scheduled foreclosure, TCI is open to selling all of its debt on the property. The hedge fund provided HFZ with a $1.25 billion loan for the project in 2017, including a senior mortgage and a pair of mezzanine loans.
The hedge fund is marketing the balance on that debt for sale with a Cushman & Wakefield team led by Adam Spies, Doug Harmon and Adam Doneger.
The pair of dancing towers at 76 Eleventh Avenue, designed by architect Bjarke Ingels, includes 275 residential condominiums, a 137-key luxury hotel, a spa/wellness center and parking.
As of earlier this year, HFZ owed about $160 million on the mezzanine loans, according to a lawsuit filed by TCI.