RXR Realty Sues, Claims One Worldwide Plaza Purchase Was “Sabotaged”
By Al Barbarino October 16, 2013 10:00 am
reprintsRXR Realty has filed a lawsuit against American Realty Capital and George Comfort & Sons for $200 million, claiming that the latter firm broke an agreement to sell RXR a stake in One Worldwide Plaza, “sabotaged” its plans to finance the deal and misled RXR into believing they were on track to purchase the entire property.
RXR had forged an agreement to buy the 48.9 percent stake in the 59-story, 1.8-million-square-foot tower with American Realty Capital as an investment partner, which included a “preemptive right” to purchase the entire property for a combined $1.35 billion, according to the lawsuit, filed through Meister, Seelig & Fein, the firm representing RXR.
But instead George Comfort & Sons cut a separate deal to sell the property to American Realty Capital for a higher price, and the lawsuit claims American Realty Capital was only able to negotiate the investment based on a financial analysis RXR shared under a written confidentiality agreement as the two firms hashed out the details of the joint venture.
George Comfort & Sons “sabotaged the lender approval process in order to coerce a termination of the agreement by RXR Investor and avail itself of superior terms from a new buyer,” and the firm made a “false promise” when it extended the close date, as the mortgage was being approved, in order to “mislead RXR… into believing that [RXR] was on a proper and timely path to closing…”
The list of grievances includes “fraudulent misrepresentation, fraudulent concealment, breach of contract including the implied covenant of good faith and faith dealing, unjust enrichment, tortious interference with contract, tortious interference with prospective economic advantage, and promissory and equitable estoppel.”
RXR seeks $200 million, plus interest, fees, costs and expenses, or a reinstatement of the original sale agreement.
But a statement from George Comfort & Sons indicated that it was in fact RXR that was unable to complete financing in time, and initially the two firms parted ways without any dispute.
“The facts are that RXR could not close the deal to purchase a 49 percent interest in World Wide Plaza in time, despite a month-and-a-half of extensions,” George Comfort & Sons said in the statement, provided by a company spokesperson. “Once the date to obtain lender consent expired, RXR terminated the contract and requested and accepted the return of their deposit. There were no complaints until a new buyer surfaced, which seems like a case of sour grapes.”
The contentious dealings illustrate the high demand for trophy properties in the city. The recent uptick in large office building sales – and the bidding wars to buy them – reflect increased investor hunger for these relatively safe, long-term bets.
There were 16 investment sales of more than $400 million so far this year, which is the greatest number recorded since 2007, Cushman & Wakefield data shows.
With the impending sale of 650 Madison Avenue and 200 Lafayette Street, the average third quarter sales price was $945 per square foot, which brings the 2013 year-to-date average price to $911 per square foot, according to data from Collier’s International. That’s above the peak levels reached in the prerecession years of 2007 and 2008, when the range was between $777 and $842 per square foot.
RXR and American Realty Capital did not respond to The Commercial Observer’s requests for comment, though an RXR spokesperson referred the CO to Meister, Seelig & Fein, which provided a copy of the lawsuit.
Crain’s first reported on the lawsuit.
Update: This article was updated on October 17, 2013, at 10:16 a.m., to include a statement from George Comfort & Sons.
