Trio of Lenders File Cases Against Madison Realty Capital

Madison Realty Capital may soon be facing down foreclosure at a half-dozen Manhattan properties once tied to the failed Signature Bank.

A group of lenders — Community Preservation Group, Related Fund Management and Neighborhood Restore — filed six pre-foreclosure actions against the borrower, PincusCo reported. The separate actions all say the same thing: Madison Realty is allegedly on the brink of default at the handful of properties.

The buildings include rent-regulated units. The lenders appeared on the scene in 2023, when they teamed up to buy a stake in $5.8 billion of Signature’s rent-stabilized loans. The Federal Deposit Insurance Corporation awarded a 5 percent equity interest to the ventures formed to hold the debt.

The buildings securing the combined $76 million worth of debt are scattered across Manhattan. The largest loan is tied to 361 East 50th Street, a 44-unit building in Turtle Bay that carries a $33 million loan originated in 2019; Madison Realty acquired the property for $40 million. The borrower hasn’t made a payment on the debt since November 2023, according to the complaint.

The other properties tied to the court cases are 216-218 West 22nd Street, 440-442 Tenth Avenue, 17 Bleecker Street, 1419 Eighth Avenue and 222 East 27th Street.

Madison Realty did not immediately respond to a request for comment from The Real Deal.

Landlords of rent-stabilized buildings have had a rough go of it since the 2019 rent law effectively capped rents on regulated assets.

Madison Realty recently tried to foreclose on Fred Ohebshalom’s Fifth Avenue Hotel, which the landlord managed to refinance with a loan from KSL Capital Partners and Columbia Pacific.

Madison Realty emerged in recent years as one of the fastest-growing lenders in commercial real estate, with The Real Deal reporting that as of 2022, the firm had earned a reputation for “a take-no-prisoners approach to the business.”

— Holden Walter-Warner