Elie Schwartz’s Nightingale Properties Defaults on $30M Loan Amidst Escalating Scandal

Edited by: TJVNews.com

Schwartz’s Nightingale Properties, a once-prominent player in the real estate market, has faced a significant setback as it defaulted on a $30 million loan linked to an office property in Midtown East. The Real Deal reported that the situation has been exacerbated by a scandal involving misappropriation of funds from small-time investors on the crowdfunding platform CrowdStreet, as was reported by the Real Deal.

Nightingale Properties procured a loan of $30 million from East West Bank in 2016 to secure the leasehold on a 15-story building located at 20 East 46th Street, with a purchase price of approximately $28 million, the Real Deal report said. The ground lease, acquired from Extell Development, was reported to have had 27 years remaining at the time of the purchase. However, the company found itself unable to meet its financial obligations, resulting in a default earlier this year. The defaulted loan balance had been reduced to $26.2 million at the time of default.

Facing the repercussions of the default, East West Bank opted to put the debt up for sale in mid-July. Notably, this development coincided with Schwartz’s entanglement in a scandal, which added to the mounting challenges. The Real Deal also reported that Alex Fuchs of Rosewood Realty Group facilitated the sale, disclosing that the debt had been purchased by a partnership between Klosed Properties and the Namdar Group.  Rosewood Realty Group was founded in 2007 by real estate titan, Aaron Jungreis. The exact amount paid for the debt remains undisclosed.

The tumultuous events surrounding Nightingale Properties were catalyzed by accusations of misappropriating tens of millions of dollars from investors on the crowdfunding platform CrowdStreet, according to The Real Deal report.  This scandal has prompted investigations by both the Department of Justice and the Securities and Exchange Commission. As a result, the company has experienced a cascade of defaults and financial difficulties across various properties.

In addition to the Midtown East property, Nightingale’s financial woes extended to other properties in its portfolio. The Real Deal report indicated that the Financial District property at 111 Wall Street, acquired for approximately $395 million, faced foreclosure as lender Oaktree Capital Management sought to reclaim its investment. Similarly, an office and retail property in Soho, located at 300 Lafayette Street, was on the brink of foreclosure before Nightingale’s partner, Intervest Capital Partners, intervened by purchasing the defaulted note.

The ongoing scandals and subsequent defaults have created a series of challenges for Nightingale Properties. The Real Deal reported that apart from the aforementioned properties, the company is grappling with financial difficulties involving assets in Brooklyn, Philadelphia, and Chicago. The uncertainty surrounding Nightingale’s stake in these properties adds to the complexities.

As investigations continue and the legal consequences of the misappropriation scandal unfold, Nightingale Properties finds itself at a crossroads, battling not only financial obstacles but also a tarnished reputation in the real estate industry.