The scene of Bernie Madoff’s spectacular crimes is now facing its own melodrama.
The Post has learned that the famed Lipstick Building is inching toward foreclosure, thanks in part to Madoff himself.
According to people familiar with the matter, Royal Bank of Canada is looking to unload a $210 million mortgage it holds on the distinctive tower at 885 Third Ave., which has fallen on hard times as a result of lower rent revenue. The Ponzi king — jailed last June in the wake of his $65 billion scheme — occupied three floors in the building.
Sources said the US government currently pays for one of the floors, while Surge Trading, the company that bought Madoff’s above-board trading operation, rents the second one. The floor containing the 16,000 square foot trading floor is available for rent at $49 a square foot.
People familiar with the matter said the tower, which got its name because its oval shape and rose color resembles a tube of lipstick, has seen its loan reserves depleted as owners dipped into that cash to offset a shortfall in rent revenue.
Like a number of commercial real estate properties, the Lipstick Building’s problems are the direct result of having been purchased at the height of the property boom.
RBC’s $210 million loan was provided as part of a complex financing structure used by Israel’s Metropolitan Real Estate Investors — led by Haim Revah and Jacob Abikzer — to pay $648.5 million for the property in 2007.
To help finance the deal, the buyers sold 79 percent of the land under the tower to SL Green, Gramercy Capital and a private investor for $317 million. They then got the RBC loan, which matures in 2017 and carries a 6.58 percent interest rate. The building pays $11 million a year to rent the land. That amount is scheduled to increase in 2012, sources said.
SL Green is seen as a likely contender to buy RBC’s loan given its control of the land, sources said.
“It was an ingenious finance structure at the time, which was predicated on a significant growth in rent, which due to Madoff and market factors did not occur,” said Howard Michaels of the Carlton Group, which arranged the financing.
Madoff occupied 40,000 square feet in the building on a lease that is set to expire next year.
Other tenants in the building include law firm Lathan & Watkins, which has more than 341,000 square feet in the building.
Doug Harmon and Adam Spies at Eastdil Secured have been tapped to market the Lipstick Building loan and another $60 million loan on 292 Madison Ave.
Harmon did not return calls for comment and Revah could not be reached. Revah’s office had no comment.