David Werner Sues Yoel Goldman to Cancel $344M Brooklyn Multifamily Portfolio Deal
David Werner is suing Yoel Goldman to cancel a $344 million deal to purchase a Brooklyn multifamily portfolio and get his down payment back.
On March 5 of last year, an entity associated with David Werner Real Estate Investments went into contract to purchase a 74-building multifamily portfolio from Goldman’s All Year Management for $344 million, according to records. Werner paid a $15 million down payment, which Goldman personally guaranteed, and the closing date was set for two months later.
In the interim, the coronavirus pandemic swept through the city, and the two sides have been engaged in protracted negotiations ever since.
Now, Werner is suing to terminate the deal, claiming that the price had been justified by a supposed rent roll of $1.9 million per month. That was no longer accurate due to COVID, according to the complaint filed in Kings County Supreme Court on Tuesday.
Specifically, Werner claimed that Goldman was offering tenants concessions and discounts without informing him, which affected the rent revenue. He requested updated information in April regarding rent collections and any concessions, discounts and defaults at the portfolio. When Goldman failed to provide that information, Werner sent a notice of termination prior to the May 5 closing date.
In the lawsuit, Werner is demanding his $15 million, as well as to foreclose on the properties he’s contracted to buy if it is not paid.
“The company is assessing the complaint, and at such an early stage cannot estimate the chances of its success,” All Year wrote about the lawsuit in a statement on the Tel Aviv Stock Exchange.
The portfolio consists of 74 buildings throughout Brooklyn, with 611 residential units and 18 retail stores, and a net operating income of $59 million. Properties include 607 Franklin Avenue, 65 Kent Avenue and 1088 Bedford Avenue across neighborhoods including Williamsburg, Bedford-Stuyvesant and Crown Heights.
Yoel Goldman is facing a series of defaults and foreclosures across his portfolio, and is in danger of losing his crowning achievement: a swanky, two-building rental complex in Bushwick where one-bedrooms are renting for roughly $3,000 a month. One half of the property, called Denizen Bushwick, is facing a Uniform Commercial Code (UCC) foreclosure in early February, and is also in default to its senior lender, JPMorgan Chase (JPM).
In Tel Aviv, where Goldman has raised over $600 million through a corporate subsidiary, All Year has paused payments on all four of its outstanding bonds, and the bonds have, therefore, stopped trading, as bondholders wield legal means to restructure the portfolio.
Two of its bonds are secured by Brooklyn properties — the aforementioned Denizen and The William Vale hotel — and the other two are unsecured. Over the last several weeks, overseers have been appointed to help restructure the portfolio; several external directors resigned because Goldman was not cooperating with the process, according to a letter posted on the TASE; and Goldman has been blocked from certain administrative powers.
At a virtual bondholder meeting in early January, Joel Biran, who is representing All Year’s interests to the bondholders said that Goldman’s cooperation is crucial because he’s the only one who truly understands the network of deals in All Year’s portfolio. “I spend a lot of time with Goldman,” Biran said. “He has all the information in his head. If it was up to me, I would use the time to do a download to what’s in his head. … From the outside, it’s very, very, very hard to learn.”