Barclays Didn’t Pay Audit Firm That Recouped It Millions at MetLife Bldg: Suit
Commercial Tenant Services is accusing a subsidiary of Barclays Group of failing to pay the full amount owed for helping recover millions of dollars in rent overpayments at the MetLife Building, according to a new New York Supreme Court lawsuit.
CTS says it performed audit services for Barclays Services Corporation at Tishman Speyer’s 200 Park Avenue from 2006 through 2009 and “identified overcharges that, if corrected, could save Barclays more than $10 million over the lease term,” the suit, filed yesterday, says. The improper charges at the 58-story building allegedly included “inaccurate utilities charges, improper amortization of capital expenses, improper building management fees, improper accounting adjustments, improper administrative costs, improper insurance costs and improper application of tenant reimbursements.”
Unbeknownst to CTS, last year Barclays made a deal with Tishman Speyer “to resolve the dispute over improper billings and overcharges, and to allow Barclays to terminate the lease early,” the suit says. A March 2015 audit settlement letter indicated that Tishman Speyer would give Barclays a $2.5 million reimbursement credit for operating expense overpayments between 2005 and 2015. Barclays allegedly didn’t inform CTS of the 2015 surrender agreement or the audit settlement letter.
CTS received its 35 percent fee, or $875,000, for the $2.5 million reimbursement payment, but that is “a fraction of the overcharges” the auditing company detected, and CTS charges that it is still owed $1.5 million, plus interest.
While the rents varied at 200 Park Avenue, they increased over time and by 2015, Barclays “was slated to owe well in excess of $30 million per year in rent for the leased premises,” the suit says. Barclays tapped CTS to find overcharges for Barclays’ lease dated June 2000 and amended several times, for the rental of the entire fourth, fifth, 27th, 28th and 29th floors, parts of the third and sixth floors, and portions of the lobby, garage/storage space and mechanical rooms. Lease commencement dates varied for the spaces, but they all had a July 31, 2017 expiration date.
William Roll of Shearman & Sterling, attorney for Barclays, said last night that he hadn’t seen the suit yet, but regardless, “I wouldn’t be able to comment on it.” Kimo S. Peluso of Manatt, Phelps & Phillips, CTS’ attorney, didn’t respond to requests for comment.