The recently revived, but long dormant, 19-unit condominium project on West Water Street in Sag Harbor has been put on the block in what will be a bankruptcy auction later this month. And all it will cost you is a minimum of $27 million.
According to bid specifications — supplied by Keen Realty Advisors and DJM Realty, which are handling the auction — the 50,000 square-foot building located directly across the street from Sag Harbor Cove waterfront will be available for open house viewing Thursday, August 1 and August 8, as well as Wednesday, August 14, from 9 to 11 a.m.
The bid deadline is August 16, with the auction date set for August 20.
According to auction guidelines, qualified bidders must be “financially able and interested” in acquiring the property for “a cash price of not less than $27,100,000.” The bidder must also have evidence of a $1,000,000 deposit in order to qualify.
Another qualified bidder? The bank which has filed a $30 million lien against the property, which is owned by East End Ventures, a development firm managed by Emil Talel, Michael Maidan and Terry Soderberg. East End Ventures filed for Chapter 11 bankruptcy in October 2012, estimating the debt on the West Water Street property at $35,344,415.
According to bankruptcy papers, a total of 26 mechanics liens are listed against the 21 West Water Street property from creditors holding secured claims in the bankruptcy case totaling $34,653,840.52 with an additional $7,353,840.52 in unsecured claims made by the same companies. The largest mechanic’s lien filed against the property is by the Longview Ultra Construction Loan Fund through Amalgamated Bank — East End Venture’s loan provider. That claim is for $32,061,312.41.
Under the auction guidelines, Amalgamated Bank is already deemed a qualified bidder and at its discretion can choose to submit a credit bid of its own in the auction for no cash, with the bid credited towards the claim it has made against East End Ventures.
If the bank is the only qualified bidder, the bank can suspend the auction for three weeks or it can be named the successful bidder. If there is more than one qualified bidder, an auction will be held on August 20 in Manhattan. Bids at auction — outside of Amalgamated Bank — must be all cash, without financing or other contingencies. The sale will be subject to final approval by the court, which will hold a hearing on the matter on August 26 at 1:30 p.m. in Central Islip.
According to a restricted appraisal completed in April 2013 by Metropolitan Valuation Services, they assess the “as is” market value of the property, which currently includes a three-story, 50,00 square-foot building with six, one-car indoor parking spaces, room for 15 to 19 condominiums and a penthouse level saltwater swimming pool, at $26 million.
Based on the information in the appraisal report, the Metropolitan Valuation Services report estimates if 19 units were sold at market rates based on market conditions a gross sellout value of $45,400,000 could be anticipated with a net sellout value of $33 million.
As of Wednesday, construction crews were still working on the building, which was originally proposed in 2006. It was approved by Sag Harbor Village in 2008 for 19 condominium units. East End Ventures also proposed a second waterfront condominium project at 1, 3 and 5 Ferry Road at the same time — a far less popular project that was impacted by a 2009 zoning code revision that drastically changed the number of units allowed as of right on those parcels and imposed affordable housing requirements.
In September of 2009, Talel and East End Ventures filed a $30 million damages suit against the village as well as an Article 78 suit, claiming they were led to believe the project would be exempt from the new code, similar to the approved condominium project at the former Bulova Watchcase Factory.
While both suits would ultimately be dismissed in 2011, as of fall 2009 workers were already walking off the job at 21 West Water Street for non-payment and by July of 2010 there were over $3 million in liens recorded with the Suffolk County Clerk’s office against the property.