Veracity Development’s retail condo at 111 Mercer Street in Soho is facing foreclosure by an arm of Barry Sternlicht’s operation.
LNR Partners, the special servicing arm of Sternlicht’s Starwood Capital, and U.S. Bank as the trustee of CMBS bondholders brought a foreclosure action in Manhattan this week against an entity connected to Veracity and managing partner Edmond Li.
The filing says the entity defaulted on a $5.65 million loan for the property’s retail condo made nearly 10 years ago.
LNR and U.S. Bank asked the court to approve the foreclosure action, allow the sale of the commercial condo unit and force Veracity and Li to make good on their debts.
Cantor Commercial Real Estate Lending provided Veracity with the loan in October 2013, according to the complaint. Veracity agreed to mortgage the property and Li signed as a guarantor. Cantor later assigned the loan to U.S. Bank.
However, Veracity allegedly fell behind on payments and was notified by LNR in October that the loan was in default. As a result, the loan’s maturity date was accelerated, making the full principal sum, accrued interest and other charges due. It is unclear when Veracity allegedly stopped paying.
LNR also wants expenses that it pays for the property while the foreclosure is pending to be tacked onto Veracity and Li’s bill, which already includes the outstanding balance, accrued interest and late fees.
Neither LNR nor Veracity commented by the time of publication. Veracity’s legal representation could not be determined, and LNR’s attorneys deferred to the special servicer for comment.
The retail condo in dispute was part of Veracity’s conversion of 111 Mercer Street more than a decade ago. Veracity bought the six-unit, 16,300-square-foot mixed-use building in 2008 for $12.4 million.