Now’s your chance to own a stake in 303 East 51st Street, the construction site made notorious on March 15, 2008, when a crane collapsed, ultimately claiming seven lives, and leading to the indictment of the crane’s rigger on charges of manslaughter, the ouster of then Buildings Commissioner Patricia Lancaster and the destruction of the beloved Fubar.
On Wednesday, The Observer came into possession of a nebulous offering memorandum for a $71.65 million mortgage on the construction site, now held by Arbor Realty Trust. The Observer showed the memo to a real estate executive who said the note appeared to be the first mortgage, and that Arbor is apparently seeking to sell to some poor (yet wealthy) sucker a note secured by the once promising development project gone to seed.
The Kennelly Development Company’s original plan was to erect a 42-story condo building at the promising midtown east location, between Second and First avenues. According to the Arbor Realty memo, the developer poured more than $120 million into the project. Then March 15 hit. The crane came tumbling down. Seven lives ended. Dozens were injured. And construction got stuck at floor 17, with the project embroiled in all sorts of legal disputes.
“[Arbor Realty Trust] anticipated that the Borrower would be able to obtain construction financing in order to repay the Loan during 1Q08 or by Loan maturity, but did not occur due to a crane accident at the Property on March 15, 2008,” reads the memo. “Since the crane accident the Borrower failed to make payments and [Arbor] was forced to moved forward with the foreclosure process. Foreclosure papers were submitted on July 25, 2008 and ART anticipates that a foreclsoure sale will be set sometime in 2Q09.”
Arbor Realty Trust, in a statement emailed to The Observer, said, “The foreclosure proceedings are continuing along a normal course and are not complete.” Arbor did not respond to any other questions regarding the precise nature of the offering.
The real estate expert said the only investor this loan could possibly attract would be a very long-term one.
“This is a fucking waste of time, unless you’re one of these old-line families that has weathered numerous downturns,” he said. “At some point, this will revert back to being a terrific development site, but at this point it’s nothing but a terrific liability.”