Bank takes over Sag Harbor condo development
A troubled condominium development in Sag Harbor has been taken over by its mortgage lender.
Amalgamated Bank acquired the unfinished complex at 21 W. Water St. from its builder, East End Development, in a deal approved Monday in bankruptcy court, said John Westerman, an attorney for the Manhattan-based bank.
The bank plans to oversee completion of the 15- to 19-unit waterfront development and begin selling the condominiums by April 2014, Westerman said. The three-story complex is roughly 90 percent complete, he said.
An auction that had been tentatively scheduled for Aug. 20, with a minimum opening bid of $27.1 million, did not take place since no bids meeting the auction requirements were received, said Chris Mahoney, a senior vice president with GA Keen Realty Advisors of Melville, which marketed the property along with Melville-based DJM Realty.
East End owed the bank about $32 million in October 2012, when the developer filed for Chapter 11 bankruptcy protection, Westerman said. The bank does not plan to accept an offer from a Manhattan-based builder, David Mitchell of Mitchell Holdings, to buy the property for $28 million, Westerman said. Mitchell described his offer in an Aug. 16 letter included in the bankruptcy court filings.
The bank believes it will "recover more if they sell the end units," Westerman said.
Mitchell and an attorney for East End did not return calls for comment Tuesday.
The project got started in 2007 but stumbled when the housing market crashed, according to court filings in the bankruptcy case.
Amalgamated loaned about $28 million to East End in March 2007, according to an affidavit by Emil Talel, who is described in court filings as a managing member with East End.
The project halted because of "the economic downturn and various interruptions and unexpected delays and issues concerning the construction," causing the builder to fall behind on payments to vendors, Talel testified.
Amalgamated filed a foreclosure lawsuit in August 2011, but later provided more funding to continue work, Talel testified.