Investors in the Israeli HAP Seven real estate project in New York were informed Monday that the property has officially been transferred to the financing entity — Madison Realty Capital — effectively placing ownership in the bank’s hands.
The notice was sent by HAP Investment founders Nir Amsel, Amir Hasid and Eran Polack, following court proceedings under Chapter 11 bankruptcy protection in the New York State Supreme Court.
Hundreds of Israeli investors had collectively put at least $70 million into the project, which was supposed to include a 7-story residential building with 129 units at 4452 Broadway in Manhattan. Construction halted in June 2021 after Madison Realty Capital ceased funding during the structural phase.
Since then, the developers sought alternative financing to complete the building. In 2022, the now-defunct public company Migdalor issued a NIS 14 million ($3.8 million) loan in an attempt to help meet the bank’s conditions.
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By March 2024, after the developers failed to revive the project or find a buyer willing to meet the $25.5 million price tag, it was decided the property would be handed over to the lender. The transfer followed a bankruptcy request filed by the partnership, which the court approved. The formal notice to investors was only sent on Monday.
In the letter to investors, the partnership wrote: “Following the court's approval of Chapter 11, several parties expressed interest in financing the project, and the company entered preliminary discussions with the hope of reaching a deal.
“Unfortunately, none of the negotiations succeeded and no bids were submitted above the loan amount. At the same time, the company attempted to secure alternative financing or an equity investor to inject capital, but given the deteriorating market conditions, no offers were made.”
The letter continued: “The consequences of this outcome are severe: it means a total loss of the investment. We understand the disappointment and express deep regret that we were unable to protect your capital. The company and its shareholders invested additional private funds and worked around the clock to try and prevent this outcome.
“However, unpredictable market conditions — including the COVID-19 pandemic, which halted construction and caused the contractor to abandon the project, followed by inflation and sharp interest rate hikes that significantly increased costs — created a challenging reality that ultimately led to this result.”