A once high-flying landlord is at risk of losing a Chelsea rental building to foreclosure.
Stone Street Properties has been hit with a foreclosure suit from lender Community Preservation Corp. over allegedly defaulting on an $8 million mortgage for 350 W. 18th St., according to a lawsuit filed Friday in Manhattan state Supreme Court.
The suit claims that Stone Street, whose CEO is Jeffrey Kaye, has not made a loan payment since January 2023 and currently owes $12.9 million, a total that includes accrued interest, late charges and unpaid tax bills.
Midtown-based Community Preservation, which was assigned the mortgage after the 2023 collapse of the original lender, Signature Bank, is seeking payment of the full balance or, if Stone Street can’t come up with the money, a court-ordered foreclosure, according to the filing.
Stone Street purchased the 6-story, 15-unit building between Eighth and Ninth avenues for $10 million in 2015, according to the city register. The prewar walkup building has at least one rent-stabilized unit, based on a 2024 filing with the state’s Department of Housing and Community Renewal.
Other evidence reinforces that 350 W. 18th offers units at below-market rents. Indeed, a two-bedroom at No. 350 is currently being marketed for $5,600, according to StreetEasy. Manhattan’s median rent, which typically covers one-bedroom units, meanwhile, is $4,500, based on February data from Douglas Elliman.
And the loan portfolio of nonprofit Community Preservation prioritizes sites with affordable housing.
It’s unclear if Stone Street, like other landlords, has been stymied by recent state laws making it tougher to hike rents on empty units at rent-regulated sites, restrictions that have apparently sent property values plunging.
But the firm, which was founded in 2011, did recently unload two Gramercy-area rental buildings purchased around the same time as No. 350 at a loss. Nos. 210 and 220 E. 22nd St. traded for $105 million last year, nine years after Stone Street shelled out $123 million for the pair.
The status of Stone Street itself is also unclear. The phone number for its former Madison Avenue office is disconnected. And Stone Street co-founder Robert Morgenstern is no longer with the firm, having gone on to found real estate company Canvas Property Group, for which he serves as CEO.
To be sure, Stone Street still owns some buildings it snapped up amid its busy buying spree a decade ago, including 309 E. 75th St., 351 E. 82nd St. and 512 E. 81st St., based on the city register.
Efforts to contact Kaye were unsuccessful by press time. A message left at Community Preservation was not returned by press time. And Mark Slama, the attorney with Windels Marx who’s handling the suit for the lender, also did not return a call.
