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One of the most polarizing residential developments in New York City—a proposed 1,000-foot luxury condo tower in the pricey Sutton Place neighborhood—took on a dramatic new turn as foreclosure proceedings were started against the developer by one of its lenders.
According to a Crain’s New York Business report, Gamma Real Estate, a real estate investment and lending firm that hold $128.8 million in loans against the property, has initiated actions to seize the project from its owner, the developer Bauhouse Group. However, Bauhouse Group insisted that the foreclosure action was inappropriate and that all loans from Gamma would be paid off.
"The lender's flawed and incomplete legal steps to rush the auction are commercially unreasonable and will not withstand judicial scrutiny," said Bauhouse Group in a press statement, adding that there were "multiple sources of capital competing for the opportunity to finance the next round of the Sutton Place development and pay off the existing lender's full principal and interest."
The project, officially known as Sutton 58, has been one of the most controversial in New York City’s crowded and expensive housing environment. To accommodate the massive structure, Bauhouse purchased three contiguous five-story apartment buildings and the development rights from an adjacent property last year for nearly $40 million, with the plans to raze the buildings for the construction of Sutton 58. But the plan stirred opposition from local residents, and the advocacy group East River Fifties Alliance filed an application with the Department of City Planning to place height limit in the Sutton Place neighborhood that would prevent the project from being built.