Eli Karp’s troubled Flatbush development site has gone back to its lender in a credit bid.
Madison Realty Capital took over the property at 1580 Nostrand Avenue with a $70 million credit bid, according to property records. Karp once planned a sprawling two-building development called Hello Nostrand on the site.
But Karp only finished one of the buildings — a 93-unit rental building at 21 East 29th Street. It was auctioned in June, along with the undeveloped Nostrand Avenue property, according to a deed filed with the city.
The property had been mired in litigation for years. Karp’s Hello Living bought the site for $13 million in 2014 with plans to build a luxury apartment complex. But as soon as construction started, he ran into trouble with lenders.
Karp put the property into bankruptcy in 2021, one day before senior lender Madison Realty Capital could initiate a UCC foreclosure process. Madison then sold the $6 million mezzanine loan and $73 million senior loan on the property to another firm, Arch Companies, which then sued Karp to initiate another foreclosure on the property.
In that suit, Arch alleged the project’s ownership entity improperly entered into a master lease with a tenant that would defer rent payments for months and could disqualify the property from the 421a tax break.
Then Arch ran into trouble of its own, and Karp agreed to the bankruptcy sale. Madison later took back over the senior loan.
Karp was once a promising developer who bet on building luxury rental apartments in less gentrified Brooklyn neighborhoods. All of his projects had “Hello” in their names and stood out for their sleek designs, which appeared out of character next to neighboring buildings.
Another Karp property at 2417 Albemarle Road was auctioned last year and went to the lender in a credit bid.
Read more
The Daily Dirt: Final chapter in Eli Karp’s tale of woe
Another Eli Karp property heads to auction block
Eli Karp’s Hello Living building heading to auction block
