Hines and Rialto Capital Management are quietly fueling a foreclosure fight against Hilson Management in Midtown Manhattan.
The partners sued last week to force the auction of a trio of office buildings owned by the Schwalbe family’s firm, Crain’s reported. The complaints were filed in Manhattan state Supreme Court.
In an unusual twist for this type of proceeding, the foreclosure battle isn’t unfolding publicly. Online versions of the complaints are limited to attorneys who are registered with the court; the court’s media officer did not respond to the publication’s request for comment.
The Schwalbes declined to comment, while Hines did not respond to a request for comment. Rialto did not respond to a separate request for comment from The Real Deal.
The complaints were first reported by PincusCo, which also noted the strange nature of the limited access.
Hines and Rialto held the initial close last fall on a targeted $2.5 billion commercial real estate credit fund, PERE Credit reported. They raised roughly $700 million by the first close and quickly began deploying capital, geared towards originating loans backed by high-quality office buildings across the United States.
Rialto and Hines purchased the Midtown office debt totaling $99.8 million back in June. The loans — originally issued by Flagstar Bank — are backed by 185 Madison Avenue, 5 West 37th Street and 349 Lexington Avenue.
The largest note, a $35.2 million loan, is secured by the 71,00-square-foot building at 349 Lexington Avenue in Murray Hill. A $34.5 million note is tied to 185 Madison Avenue, an 80,000-square-foot office property, while the third, a $30 million note, is backed by the 83,000-square-foot building at 5 West 37th Street.
The buildings are all at least 90 percent occupied, according to CoStar, and the West 37th Street property is fully occupied.
— Holden Walter-Warner
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