Lender seeks to exclude Jack Terzi’s Soho ‘jewel box’
Jack Terzi’s ‘jewel box’ in Soho could be seized.
Wells Fargo, acting as trustee for Commercial Mortgage Bondholders, is seeking to seize Terzi’s property at 63 Spring Street, alleging Terzi has been in default on an $18.5 million CMBS loan since April 2020.
Terzi, of real estate developer and broker JTRE, bought the commercial building at 63 Spring Street for $15 million in 2014. Terzi called the neglected site at the corner of Lafayette Avenue, which then housed a smoking room, a “box to jewelry”. in the upscale neighborhood.
Terzi brought in new retail tenants, including cupcake shop Baked by Melissa, and landed an anchor in cosmetics retailer L’Occitane in 2017. The repositioning saw him secure an $18 refinance. $.5 million on property with MUFG Union Bank, over $3 million above. its original purchase price.
In 2019, he told Crain’s the property was worth “about $30 million.”
“To me, this is the perfect test of what you can still do with retail today,” he said at the time.
Then came the pandemic. Retailers in Soho closed en masse and foot traffic came to a standstill. Things got worse when L’Occitane filed for bankruptcy in January 2021, closing 23 stores, including its Soho outpost.
“Any problems with the property were the direct result of tenant L’Occitane filing for bankruptcy in January 2021, in which it blamed the effects of the Covid-19 pandemic on the retail sector for its failure to meet its financial obligations to the owner,” Christopher said. Milito, who portrays Terzi with Morrison Cohen’s Y. David Scharf.
“Our client is committed to working in good faith with their lender to resolve any resulting issues,” Milito added.
But by the time L’Occitane filed for bankruptcy, according to the foreclosure suit, Terzi had already fallen behind on its loan, which was securitized and sold to bondholders. A notice of default was given in July 2020. The lender sent a notice of acceleration a month later.
The lender alleges that it is owed $25.4 million, an amount that includes default interest and special service charges.
Since the start of the pandemic, borrowers have struggled with CMBS loans. Unlike a traditional mortgage, CMBS loans are often bundled and sold to bondholders. When things go wrong, they are handed over to a third party known as a special repairer. Borrowers say they find it more difficult to work with a special agent than with a conventional bank.
Terzi, who started his real estate career as a commercial broker, is no stranger to legal disputes. He remains embroiled in a dispute surrounding his lease with China Sonangol at 23 Wall Street, the Gilded Age office building across from the New York Stock Exchange that was originally the headquarters of JPMorgan.
A Terzi-affiliated entity said the building’s landlord, China Sonangol, sent a notice of default for unpaid rent owed in June and told him to cough up the money by August. But Terzi claims that China Sonangol miscalculated the rent.
A native of Gravesend, Brooklyn, Terzi founded JTRE Holdings in 2008.