Threat of Foreclosure Looms Over the Fifth Avenue Hotel

Foreclosure proceedings have been initiated against the owners of Fifth Avenue Hotel, just 10 months after its grand opening, by private equity firm Madison Realty Capital. The suit alleges that Empire Management has defaulted on loans valued at $81.5 million for the luxury hotel at 250 Fifth Avenue.

The Fifth Avenue Hotel consists of a six-story landmarked 1907 building, which historically housed banks and offices, and an adjoining 23-story tower whose construction began in 2018. The hotel’s grand opening was in October of last year, though only half of its 153 rooms and suites were ready, according to GlobeSt.com. Nightly rates for the available “jewel-box” rooms start at $995, and run up to just over $3,000. Founder Alex Ohebshalom has described the hotel as “inspired by the Gilded Age,” with “interiors ... adorned with ornate, bespoke fixtures and furnishings.”

Ohebshalom is the head of Flaneur Hospitality, the luxury hotel group that developed the Fifth Avenue Hotel. He’s also the principal of Empire Management. In 2019, Empire Management obtained loans from Santander Bank and City National Bank of Florida, through the entity Cosmic Realty Partners LLC, according to the loan agreement filed in court. The agreement shows that Fred Ohebshalom, Empire Management’s CEO and Alex’s father, signed the loan agreement as guarantor.

Those loans matured on January 31. According to court filings, Santander Bank sent Empire Management a letter in early February, claiming that the real estate firm had failed to pay off their debts, and that the mechanic’s liens on the property—which the bank said amounted to over $12.1 million—could also constitute an event of default.

In March, Maguire Capital Group, Madison Realty Capital and Newbond Holdings purchased the loan from the original lenders, according to The Real Deal. Madison Realty Capital’s attorney filed the pre-foreclosure actions on August 15. PincusCo first reported news of the lawsuit.

Empire Management and the Fifth Avenue Hotel did not respond to our requests for comment by press time.

On its website, Empire Management claims that its real estate profile consists of over “2,000 multifamily apartments over one million square feet of office, industrial, and retail space.” In December 2022, the business made headlines for facing foreclosure on an office building in Midtown, though the foreclosure was later withdrawn. In January 2023, New York City filed a lawsuit against Empire Management, Ohebshalom and his associates for allegedly allowing eight of their Upper Manhattan rental properties to “deteriorate to the point where they pose an imminent threat to the health and safety of the tenants and the public.” The complaint described numerous building violations, including “unapproved, unsafe, and unsuitable” electrical work; cracked, unmaintained building facades; and elevator defects “so dangerous,” tenants were ordered not to use them. The case was discontinued without prejudice in October 2023.

Fred Ohebshalom’s nephew, Daniel Ohebshalom, has also been sued by the city for hazardous conditions in his Upper Manhattan rental properties. Earlier this year, Daniel Ohebshalom served a 60-day jail sentence on Riker’s Island for disobeying court orders to fix violations in his rental properties. The judge on his case has since issued another arrest warrant.

Fred and Daniel Ohebshalom’s real estate businesses appear to be separate, though they have shared ownership of at least one rental property: 444 West 48th Street, which was managed by Empire, according to an arbitration document obtained by Straus News.