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Sharif El-Gamal faces foreclosure at “Ground Zero mosque” site

And Michael Dell’s MSD Partners goes after unfinished project next door

“Ground Zero mosque” site faces foreclosure in NYC
Developer Sharif El-Gamal with 49-51 Park Place and 45 Park Place (Getty)
By
Dec 13, 2023, 1:30 PM

In Tribeca, a controversial site that seized national attention in the wake of 9/11 is back in court. 

Sharif El-Gamal’s vacant development site at 49-51 Park Place is facing foreclosure next to 45 Park Place, the developer’s half-baked luxury condo tower, after a lender claimed he defaulted on a $7.5 million debt secured by the vacant parcel, court records show.

The foreclosure suit, filed by small-time lender Blueberry Funding LLC, based in Lakewood, New Jersey, is the latest plot twist for El-Gamal, who has courted controversy at the sites for decades. 

“The lender is a good-faith, arms-length lender who has been trying to work with the borrower for a long period of time,” said the lender’s attorney, Jeremy Doberman of the law firm Bochner.

“There comes a time when people’s assurances are no longer good enough and in order to get paid back, you have to take things to the next step,” said Doberman. “This is what the legal filing represents.”

Debt like El-Gamal’s is frequently bought and sold in private capital markets. Blueberry Funding acquired the note in a 2021 transaction alongside an affiliate of Realty Capital Finance. There is no personal guarantee for the debt, a common recourse at loan-to-own shops, and no other senior lenders were uncovered during a title search for the property. The outstanding debt on the property appears considerably less than the value of the site were it to be developed.

The site at stake is a 4,700-square-foot dirt lot, empty except for the base of a construction crane that rises to hang above the forlorn and unfinished 45 Park Place, whose towering 43 stories were a result of an air-rights transfer from the empty parcel. 

El-Gamal told The Real Deal that he expects construction to resume at the condo project next year, after his company Soho Properties beat back a foreclosure lawsuit in June brought by Malaysia’s Maybank, the senior lender on the project until Michael Dell’s MSD Partners bought its $170 million position.

“They have been very reasonable thus far,” El-Gamal said of his new lender in an email. “I trust that will continue and allow us to settle their claims and restart construction in January.”

Since taking over Maybank’s debt, MSD has taken up the fight to foreclose on 45 Park Place at the appellate level, trying to overturn the decision that preserved El-Gamal’s ownership. Earlier this month, it asked a New York appellate court to extend a filing deadline so it could “perfect” its appeal. MSD originally had a small ownership stake in the project, where no units have sold. 

“Ground Zero mosque” site faces foreclosure in NYC
45 Park Place, unfinished, and 30 Park Place, which began construction at a similar point in time.

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El-Gamal declined to comment on the foreclosure lawsuit on the vacant parcel, and has previously denied controlling it, despite signing financial documents as a borrower for it. 

The murk of who owns and controls the vacant site traces back to when El-Gamal bought the property, then a five-story building damaged by debris from the 9/11 terror attacks, and the first piece of his eventual two-property assemblage in Tribeca, in 2009 for $5 million. 

After buying the damaged building, the Brooklyn-born El-Gamal proposed a new Islamic center to serve the Downtown Muslim population. A national frenzy over the legacy of 9/11 thrust the project into the spotlight.

The planned center was branded by political opponents as the “Ground Zero mosque,” with conservative talking heads on Fox News and talk radio working up a storm of outrage ever since the plan was announced. The name stuck and nothing was built.

After El-Gamal bought an adjacent site in 2014 for $8.5 million, he opted to build glitzy condos instead, amassing one of the most unusual financing packages in the history of New York City real estate by securing a sharia-compliant construction loan from Middle Eastern lenders. 

Despite opposition to the “mosque,” El-Gamal continued to promote the creation of a scaled-down Islamic museum, to be designed by architect Jean Nouvel, on the unused portion of the site. Yet fundraising details have been hard to come by, and no wealthy benefactor — the kind that New York City regularly mints — has stepped forward to steer the project forward.

Today, the site remains undeveloped, and the top floors of the condo building next door are unfinished and fully exposed to the elements — the result of delays, controversies and lawsuits to a project that U.S. lenders viewed as arriving too late to catch the peak of the Manhattan luxury condo market. (At one point, El-Gamal threatened to remove the top stories of the condo tower unless his lenders relented in their pursuit of foreclosure.)

In an email this week, El-Gamal teased “big announcements” for the project. 

The developer is also battling foreclosure at his Times Square hotel, Margaritaville.

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Companies and People
MSD PartnersSoho PropertiesSharif El-Gamal