Empty Auction Spawns Lower East Side Rentals

New Jersey investor Michelangelo Russo can finally call 179 Ludlow Street his own. Mr. Russo signed a contract on the six-story building about six months ago, but a conflict between Steven and Peter Salvesen, the former owners of 179 Ludlow, sent the building to auction on Thursday.

The auction was held and no one showed up.

According to James Famularo of New York Commecial Realty Services, who repped Mr. Russo, all the hubbub stems from when the Salvesen brothers, a.k.a. 2 Funny Guys LLC, bought 179 Ludlow for $3 million in July 2006. Halfway through building a six-story structure on top of the original building’s basement, the brothers had a big falling out, and they put the incomplete structure on the market for $6 million. Mr. Russo came along and bid $5.2 million. Steven liked the deal, and he signed a contract with Mr. Russo.

Peter thought the building was worth more than $5.2 million and filed a case against Steven, essentially saying that he couldn’t sell the building without his consent. Instead of going back and forth for months, Steven filed for bankruptcy. The judge ordered a trustee to oversee the case; the trustee then ordered the building to go to auction.

The auction was empty, and Russo got 179 Ludlow for the $5.2 million.

“I knew my customer had the deal because he had done six months of extensive research and knew every detail about the project,” Mr. Famularo told The Real Estate.

Mr. Russo plans to develop high-end rentals at 179 Ludlow, bucking the Lower East Side’s recent condo-building trend. Mr. Famularo will handle leasing for the new apartments. Construction is expected to begin within the next several weeks.

- Mark Wellborn