Upper East Side Medical Building Faces Foreclosure Issues

News Summary

An Upper East Side medical building at 162 E. 78th St. is on the brink of foreclosure after failing to make mortgage payments for over a year. Owned by the Feil Organization and Rosen Equities, the property has seen a significant drop in occupancy, currently at 46%, exacerbating its financial difficulties. With lenders like Blackstone involved, the legal ramifications of the foreclosure lawsuit could impact both the owners and the healthcare community relying on this facility’s services.

New York City – An Upper East Side medical building is facing potential foreclosure due to a significant failure to make mortgage payments. The property, located at 162 E. 78th St., near Lexington Avenue, has reportedly been over a year behind on payments on its $9 million loan, raising serious concerns among lenders, which include prominent investment firm Blackstone.

A lawsuit was initiated last Wednesday in Manhattan Supreme Court, alleging that the current owners, the Feil Organization and Rosen Equities, have defaulted on their mortgage obligations. Payments on the loan have not been made since February 2024, compounding the issue and shining a light on the dire financial situation that the owners are facing.

The medical building is designed in a townhouse style and currently has an occupancy rate of just 46%, according to data from CoStar. This low tenant occupancy proves particularly problematic as the average rent at the property is approximately $80 per square foot annually. Current tenants include various health professionals such as gynecologists, physical therapists, and psychologists, but the overall leasing situation places further strain on the property’s financial stability.

Originally purchased by the partnership for $17.4 million in 2016, the acquisition was partly financed by the aforementioned $9 million mortgage, which was issued by Signature Bank. Following the collapse of Signature Bank in early 2023, the investor group later acquired a 20% stake in its former portfolio for approximately $1.2 billion later that same year.

Feil Organization, which is headquartered in the Penn District, is led by CEO Jeffrey Feil, while Rosen Equities is managed by Jonathan Rosen from the Upper East Side. Despite the emerging situation, both firms have not provided comments regarding the ongoing legal matters related to the foreclosure lawsuit.

The building has a notable history, including previously housing the Research Institute for the Study of Man, which conducted significant research on health risks associated with marijuana use during the 1970s. This adds a layer of intrigue to a property now embroiled in a financial crisis.

As the Upper East Side medical building risks losing its operational viability, the broader healthcare landscape appears challenging as well. Several hospitals have begun announcing layoffs due to anticipated Medicaid cuts by Congress. Notably, New York-Presbyterian has indicated plans to lay off 1,000 workers, showcasing the increasing financial pressures within the healthcare sector.

Michael Kwiatkowski of Cullen and Dykman filed the lawsuit on behalf of the lenders and, to date, has also not responded to requests for comments concerning the situation. The outcomes of this legal action against Feil Organization and Rosen Equities could have significant implications not only for the owners but also for the communities depending on the services offered by the medical professionals operating in the building.

As the situation develops, it will be essential to monitor the outcomes of the legal processes and any potential impact on the tenants who currently utilize the facility for their medical needs.

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Additional Resources

• Patch: Upper East Side Building at Risk of Foreclosure
• Crain’s New York: Medical Office Building Sued
• NY Post: Bill Cosby Lists NYC Townhouse Amid Foreclosure
• Wikipedia: Foreclosure
• Google Search: Upper East Side real estate news