Sterling American Properties is giving up a struggling three-building office complex in Hauppauge, N.Y., to its creditors after more than a year of missed mortgage payments.
According to a report by Trepp, the real estate investment management business controlled by New York Mets owners Fred Wilpon and Saul Katz, owed $12.7 million on the debt as of last summer. The real estate backing the loan is a 127,000 square-foot property called Woodlands Office Park. The debt was turned over to special servicer ORIX Capital Markets, Trepp said.
Trepp noted that the mortgage payments stopped in 2010 as the owners tried to work out a mortgage modification with their creditors, a trust created by J.P. Morgan.
The 7.5-acre complex was purchased in 2006 for $20.2 million by an investment fund established by the business called Sterling American Property IV.
Gregory Nero, general counsel of Sterling American, said in a statement that the business had written down the value of its equity investment for the property to zero nearly a year ago. (He could not be reached for additional comment.)
When the fund purchased the building in 2006, the complex was 87% occupied. Trepp said the occupancy fell to 68% in 2008 and was as low as 48% in the middle of 2009.
Tenants that have offices in the complex include Memorial Sloan Kettering Cancer Center, Oppenheimer & Co Inc., Eating Disorder Associates, Sweezey Commercial Real Estate, and Heritage Capital Mortgage.
At the present time, both Wilpon and Katz are also facing a $1 billion lawsuit from investments they made which were part of Bernard Madoff’s Ponzi scheme. Trustee Irving Picard is claiming that the businessmen should have known about the fraudulent scheme, while the owners have denied the charges in the lawsuit.
