A lender has sued developers Joseph and Meyer Chetrit over what it claims are hundreds of millions of dollars in unpaid loans linked to an infamous Times Square hotel, the latest bump in a rough stretch for the prominent real estate family.
Mack Real Estate Credit Strategies alleges that the brothers, co-principals of the firm the Chetrit Group, owe a total of $223 million for three mezzanine loans secured by the Hotel Carter at 250 W. 43rd St., according to a filing that appeared Tuesday in Manhattan state Supreme Court.
And Mack is seeking a quick payoff for the supposedly defaulted loans, which the lender issued in 2022 and came due in September, filings show. Mack is asking a judge to issue a summary judgment when both sides appear at the Centre Street courthouse Feb. 20, a move designed to force the Chetrits to immediately settle debts on the building, which was once voted the country’s filthiest hotel on a travel website.
If the Chetrits can’t or won’t pay, Mack could move to seize the 22-story site by way of a UCC foreclosure, a process that plays out between developers and lenders outside of a courtroom and is generally speedier than a typical judicial foreclosure.
In the fall Mack also tried to collect a portion of the supposedly past-due debt with similar summary judgment-type suits. The latest salvo seems to be a continuation of the earlier actions as well as an escalation to collect on previously unknown mezzanine loans. Because mezzanine debt is only indirectly tied to real estate, it isn’t listed in property tax records and so public details can be scarce.
The Chetrits, who have spent years renovating the prewar property near Eighth Avenue, have not yet filed a legal response. But Leo Jacobs, the lawyer who represents Joseph Chetrit in litigation matters, told Crain’s his client will seek to postpone the February court appearance by up to two months, a tactic also deployed in the fall.
Jacobs added that the plaintiff and the defendant should both hope for an amicable resolution.
“At the end of the day, both the lender and the borrower have a common problem: market volatility,” he said. “The lender bet on the borrower, and the borrower bet on the lender, and both are going through hell.”
The currently-shuttered hotel, which earned its dubious distinction about a lack of cleanliness from the online review service Tripadvisor in 2006, 2008 and 2009, was purchased by the Chetrits for $192 million in 2015, according to the city register. The Chetrits, who briefly owned the landmarked Chelsea Hotel, planned a major renovation. And varying degrees of scaffolding and green construction fences have shrouded the Hotel Carter since a couple of years after the Chetrits purchased the site, Google Street View photos reveal.
But the renovation of the 239,000-square-foot midblock property appears to have hit snags. A partial stop-work order exists on the site, according to current city Department of Buildings records. Likewise, the Chetrit Group owes about $420,000 in civil penalties for a variety of violations, including a $140,000 fine for not filing reports about the state of the facade, Buildings records show.
The brothers borrowed extensively against the Hotel Carter several times, according to the register, with the most recent mortgage, a $129 million issuance from JPMorgan Chase & Co., occurring in 2018. Mack acquired that debt in 2022, according to the register; Meyer Chetrit’s signature appears on loan documents from the time. But that primary mortgage does not seem to be in trouble, based on court filings.
It’s been a rocky few months on a professional and personal front for several members of the Chetrit clan. A lender moved last month to foreclose on a $19 million loan secured by Joseph’s personal residence on the Upper East Side, though his lawyers filed a motion this month to dismiss the case as his outstanding debt had been paid off.
The Chetrit Organization also faced foreclosure at a massive, 1,300-unit development site in Manhattan’s Two Bridges enclave before renegotiating a loan with Madison Realty Capital.
In addition a brother of Joseph and Meyer, Jacob Chetrit, passed away this month at the age of 69. Jacob and a fourth brother, Juda Chetrit, operated the similarly named development firm the Chetrit Organization, which in the fall was sued for allegedly defaulting on a $156 million mortgage backed by the Financial District’s 1 Whitehall St.
Stephen Meister, an attorney with the firm Meister Seelig & Fein handling the case for Mack, did not return an email seeking comment.
