Ceruzzi Properties has tried just about everything to save its troubled Hayworth condo project on the Upper East Side, but the developer has run out of rope.
The lender on the 61-unit building on Lexington Avenue initiated a foreclosure action for Ceruzzi’s ownership interest in the property, according to a notice for the auction.
The move by the UK-based Children’s Investment Fund comes after Ceruzzi — whose founder, Louis Ceruzzi, died unexpectedly in 2017 — tried a number of tactics to make the best of the situation and control the fate of the project.
The developer, led by president Arthur Hooper, tried and failed earlier last year to secure rescue financing for the Hayworth and later sought to sell its equity position. But Ceruzzi’s price was too high, according to a source familiar with the project, and potential investors balked.
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The Children’s Fund sued Ceruzzi last fall for missed payments on the construction loan, and as recently as last month Ceruzzi agreed to a $29 million judgment. It’s not clear what has since led to Children’s initiating the foreclosure.
Representatives for Ceruzzi and Children’s Investment Fund did not immediately respond to requests for comment.
An auction for Ceruzzi’s stake in the completed building is scheduled for Jan. 10, according to materials from a Cushman & Wakefield team led by Adam Spies and Adam Doneger, which is marketing the sale.
Ceruzzi began assembling the site for the Hayworth, 1289 Lexington Avenue, in 2013, and launched sales in 2019. But by then the city’s condo market had weakened significantly and the project struggled.
The Children’s Investment Fund, which backed some of the biggest condo projects of the last development cycle, has become more aggressive with delinquent borrowers. The company is foreclosing on HFZ Capital Group’s interest in its $2 billion XI project on the High Line.