10 Rittenhouse’s senior lender files for foreclosure

The senior lender for the luxury 10 Rittenhouse Square condo project is seeking to foreclose on it and place the 33-story Center City high-rise in receivership.

Istar Tara L.L.C., of New York, which originally had about $251 million in two loans tied up in the Robert A.M. Stern signature building at 130 S. 18th St., has filed suit in Common Pleas Court to foreclose on the building.

There are 135 condos, priced from $600,000 to $15 million, at 10 Rittenhouse, as well as retail and restaurant space.

Building management said Tuesday that 41 units have either sold or are under contract, with five more currently in negotiation. Sales reportedly have helped trim the amount owed Istar to about $190 million.

In July, anticipating Istar's actions, the project's mezzanine lender, Delaware Valley Real Estate Investment Fund, sued Istar.

A mezzanine loan is similar to a second mortgage in residential real estate, and Delaware Valley Real Estate Investment Fund has a $57 million stake in the building. The fund's subsidiary, Rittenhouse Pension Investors L.L.C., assumed management of 10 Rittenhouse from developer ARCWheeler Inc. in July.

At the time, Delaware Valley Real Estate Investment Fund, a consortium comprising the pensions of 47,200 union members (primarily in the construction trades), said it was acting to save 10 Rittenhouse "from the depredations of a troubled hedge fund and rogue lender."

There was an indication Tuesday of how troubled Istar is: Bloomberg reported that the lender might seek bankruptcy protection after creditors blocked it from amending $8.6 billion in loans.

Attempts Tuesday to reach Istar senior vice president Andrew Bachman for the lender's side were unsuccessful.

John C. Decker, managing partner of Rittenhouse Pension Investors, said he had seen the foreclosure papers, but not Istar Tara's petition to appoint a receiver, which appeared on the Common Pleas Court docket Friday.

Decker said Rittenhouse Pension has been in contact with Istar daily obtaining approval of sales, which have totaled about $15 million since mid-July.

Sales have quadrupled since the takeover, he said, with August purchase prices averaging $1,000 a square foot. Sales average one unit a week.

Decker said condo owners and buyers appear to be taking the legal wrangling in stride. Receivership may be another matter, however.

Istar also was the senior lender for Aria, the condominium building at 1419 Locust St.

When Aria's New York-based developer defaulted on its loan, the building went into receivership, and sales were halted for a year, starting in January 2009.

GoldOller Aria Associates, of Philadelphia, bought the unsold units and ground-floor commercial space at sheriff's sale in November. Sales began closing again in January.