The Monarch 716 student-housing complex that was seized by the lender in a foreclosure last year will be going on the block next month to satisfy the $44 million debt that remains on the property.
The 592-bed complex at 100 Forest Ave. will be publicly auctioned in the foreclosure alcove of Erie County Hall in downtown Buffalo at 10 a.m. on April 8, according to an order by the court-appointed referee, Ray Walter.
Built by Rochester-based DHD Ventures to serve Buffalo State College and other area schools, the complex has 192 suites in nine apartment buildings, plus a clubhouse, a gym, a two-lane bowling alley, a computer lab, a stand-up tanning bed, a swimming pool, basketball courts and fire pits.
It opened in September 2017 but quickly became a source of multiple problems, including crime and maintenance. More significantly, DHD failed to pay all of its construction bills, leading to multiple liens and lawsuits filed against it.
Ultimately, Acres Capital – an administrative agent for Reliance Standard Life Insurance Co., Philadelphia Indemnity Insurance Co. and Safety National Casualty Corp., which together loaned DHD $36.4 million – filed for foreclosure on the debt, which has ballooned with interest and fees. DHD principals Thomas Masaschi and Jason Teller sought more time to get alternative financing, but the judge rejected the effort in November and ordered the foreclosure, appointing Walter to lead the sale.
Meanwhile, general contractor Kulbacks Inc. – which oversaw the $31.9 million construction contract – filed its own lawsuit against DHD, Masaschi and Teller last month, seeking payment of the $3.6 million lien that remains unpaid from the project. The Lancaster-based firm says it is still owed money for labor, materials and equipment provided from Jan. 11, 2016, through Feb. 14, 2018. The lawsuit cites breach of contract, breach of fiduciary duty, unjust enrichment and fraud.
Masaschi is also still engaged in a separate legal fight with former partners over another student-housing project, this time next to the University of Rochester campus along the Genesee River. Buffalo developers John Yurtchuk and David Huck had ejected Masaschi from the limited liability company that developed the 506-bed Riverview Collegiate Apartments after accusing him of violating their agreement and their loan documents.
Masaschi sued his former partners, accusing them of "bad faith" and "factually unjustified conduct" by making up "spurious claims" of fraud to kick him out, after he came to them with an offer from Pittsford-based Monroe Capital to buy out his 32 percent interest for $5 million. He said he gave Yurtchuk and Huck an opportunity to match the offer themselves, but the partners instead canceled his interest "based on bogus allegations" that Masaschi wrongfully pledged his membership interests in Riverview to Monroe, his creditor.
He's asking a judge to restore his rights, expel Yurtchuk and Huck, and dissolve the partnership. But the Buffalo partners say their action was justified after they learned that Masaschi had improperly pledged his interest to Monroe without their knowledge and then allegedly lied about it in loan documents for a refinancing with Northwest Bank.