Nightingale Properties' Midtown Office Tower Seized By Lenders
Nightingale Properties has lost control of another property, this time losing an office building a few blocks from Grand Central Terminal in Midtown Manhattan.
Namdar Realty Group and Klosed Properties have acquired the ground lease for 20 E. 46th St. for $10.4M, according to records filed with the city register. A representative for Namdar confirmed the acquisition via deed-in-lieu of foreclosure to Bisnow. PincusCo first reported the transaction.
In 2016, Nightingale bought the leasehold on the 15-story office for approximately $28M from Extell Development. But in 2023, Nightingale, engulfed in scandal, defaulted on its $30M loan from East West Bank.
Nightingale CEO Elie Schwartz stopped making payments on the loan around the time when he was accused of misappropriating more than $50M from investors on the real estate crowdfunding platform CrowdStreet.
Schwartz and fellow Nightingale co-founder Simon Singer — who has since distanced himself from the firm — had paid the loan down to $27M prior to defaulting, per documents filed in New York County Supreme Court.
Following the default, East West Bank proceeded to sell the debt to Namdar Group and Klosed Properties, which filed a pre-foreclosure action in November 2023. At the time, approximately 20 years were left on the ground lease, with an expiration date in September 2043 and an option to renew through 2046, according to court records.
Namdar continued to make ground rent payments to fee owner Solil Management, according to Pincus. Both Schwartz and Singer signed the deed-in-lieu-of-foreclosure arrangement.
Nightingale spent the years before the pandemic amassing a portfolio of buildings it claimed was valued at more than $10B, spanning 22M SF. Most of those investments were in office buildings, and the firm has lost control of large properties in Manhattan, Brooklyn and Philadelphia where it stopped making rent payments.
To pay back the crowdfunding investors whose money Schwartz allegedly embezzled, he agreed to a settlement in October 2023 that would allow him to pay in installments over several years the money that was supposed to be put into equity in office buildings in Atlanta and Miami Beach.
He made the $3M first payment in January but missed the deadline to pay the second $3M installment as part of a settlement agreement, Bisnow reported. Schwartz has not made additional payments, and investors are hoping that federal investigators will file criminal charges against the developer, according to a recording obtained by Bisnow.
Schwartz's attorneys that represented him in the settlement have since quit, claiming they haven't been paid, according to filings in bankruptcy court.
The trust for the spurned investors has placed liens on several of Nightingale’s commercial assets and is seeking sales of those properties.
LLCs tied to those properties — The Labs on 121, a 160K SF life sciences and office building in Harlem owned in partnership with Real Estate Equities Corp., plus 1835 and 1635 Market St. and 1500 Spring Garden St. in Philadelphia — are named in the settlement agreement between Schwartz and the investors, but the LLC that controlled 20 E. 46th St. isn't mentioned.
The representatives for the bankrupt entities and Klosed Properties did not respond to Bisnow’s request for comment. Schwartz didn't respond to a request for comment.
