Rialto goes after Stellar Management, City Urban Realty

Rialto Capital is coming after another Signature Bank borrower.

Jeff Krasnoff’s firm filed a lawsuit in Manhattan Supreme Court seeking to foreclose on a loan tied to a Chinatown office building owned by the Gluck family’s Stellar Management and Michael Alvandi’s City Urban Realty.

The landlord allegedly defaulted in June on a $21 million loan tied to 243 Canal Street, a six-story Class B office building. Larry Gluck, who died last June, and Alvandi guaranteed the loan, according to the suit, which was first reported by PincusCo.

Rialto, the loan servicer for the joint venture that holds Signature Bank’s non-rent-regulated commercial real estate loans, has embarked on a relentless pursuit of initiating defaults on property owners who had secured loans from the failed customer-friendly bank.

One borrower, Midtown Equities’ Joseph Cayre, fought back. In February, Rialto filed to foreclose on a Brooklyn Heights property at 205 Montague Street, claiming Midtown Equities had defaulted on a $45 million loan.

Midtown, however, alleged Rialto maliciously schemed to engineer a default. The company filed a class-action lawsuit against Rialto; 10 days later, the two sides settled their dispute.

City Urban and Stellar bought the 22,000-square-foot building between Lafayette and Centre streets in 2016 for $25 million from the estate of the late Sau Tchu Luu Fan. They took out the Signature loan in 2019 and it matured in June after several extensions.

Blackstone Group notified the borrowers in August that the loan was in default but the principal and interest remained unpaid as of May 1, according to the suit. A Santander Bank branch occupies the ground-floor retail space. Two of the four floors of office space are listed for rent on CoStar

Representatives for Rialto, Blackstone, Stellar Management and City Urban Realty did not immediately respond to requests for comment.