Midtown Equities, run by the Cayre family, is taking Miami-headquartered investment firm Rialto Capital Advisors to court for allegedly engaging in a “sinister” scheme that the family says is costing them millions of dollars.
Midtown Equities, based in the Flatiron District, filed a complaint in Manhattan state Supreme Court Monday alleging that Rialto unlawfully declared the real estate company in default on a $45 million loan it had secured to 205 Montague St. in Brooklyn Heights after baselessly refusing to extend the loan’s maturity date, according to the paperwork. Midtown Equities is seeking at least $20 million in damages.
Midtown Equities purchased 205 Montague in 2010 for $33 million and paid the city $3.2 million two years later to remove restrictions on what could be developed at the site, according to property records.
In 2022 the firm took out a loan on the 1960s-era 5-story office building with the now-defunct financial institution Signature Bank. Its initial maturity date was Aug. 3, 2024, with an option written into the contract to extend it by one year, records show. Rialto, in partnership with Blackstone, took over the loan after Signature’s collapse and as part of its acquisition of the bank’s portfolio, according to the lawsuit.
Max Padden, senior vice president at Midtown Equities, wrote in the complaint that the firm had requested an extension of the loan on May 8, 2024, within the required timeframe, but that Rialto ignored its numerous requests and instead “embarked on a campaign of deception to engineer” a false default, records show. About a month before that, Midtown Equities had entered into an agreement to sell the property to an unidentified buyer but was unable to close as a result of its alleged financial troubles, the firm said, forcing it to lose out on the cash from the sale, in addition to the interest and fees associated with the alleged default.
Developer Jonathan Landau, meanwhile, had filed plans with the Department of Buildings last March — around the same time the transaction was slated to go into contract — to erect a 47-story tower with 136 residential units and a restaurant at 205 Montague St., Crain’s reported at the time. It’s unclear if the Carye family was working with Landau on the proposed project or if Landau was the purchaser in line to acquire the site, at the corner of Cadman Plaza West near Borough Hall. Demolition permits for the existing building have not been filed, records show. A representative for Landau did not return a request for comment by press time.
Aaron Solomon, an attorney at the downtown Manhattan-based law firm Oved & Oved, which is representing Midtown Equities, did not respond to a request for comment, and attempts to reach Rialto Capital Advisors were unsuccessful by press time.
