CBRE Sues FreshDirect for $400K Breakup Fee on Attempted Bronx HQ Sale
Breaking up is hard to do.
The suit, filed Tuesday in Manhattan Supreme Court, claims CBRE is owed the fee after it fielded “multiple offers,” for the center at 2 St. Ann’s Avenue that FreshDirect rejected. FreshDirect has so far not paid the fee because, according to a letter to CBRE earlier this year, FreshDirect found the offers “inadequate,” so it doesn’t have to pay the breakup fee.
A spokesperson for CBRE declined to comment. A spokesperson for FreshDirect did not immediately respond to a request for comment.
In 2019, FreshDirect tapped CBRE as the exclusive broker to sell its 650,000-square-foot Port Morris property, which FreshDirect built and opened in 2017.
The listing agreement stipulated that if no sale or loan of more than $200 million closed on the property within a year, FreshDirect would be on the hook for the breakup fee, according to court records.
CBRE said it secured “multiple offers” for the property, including a $205 million offer from Thor Equities and a $200 million offer from Centerbridge Partners, but FreshDirect rejected the offers and the breakup fee became due.
Even with a letter warning of legal action that CBRE sent in February, FreshDirect refused to pay up, court records show.
FreshDirect shot back in a letter in March, claiming that Thor and Centerbridge never put up “bona fide offers of $200 million or more … that [FreshDirect] could accept” so it wasn’t on the hook for the breakup fee.
“Thor provided an initial indication of $205 million which included a 3 percent asset management fee which equaled $6.15 million,” FreshDirect wrote. “[FreshDirect] countered at $219 million. Thor, having conducted further diligence, countered with a lower offer than originally provided to the company, at $170 million.”
FreshDirect also found faults with Centerbridge’s offers, writing that its initial offering was for $185 million, with $15 million in “performance payments” that stretched out over five years and was conditioned on FreshDirect “achieving certain financial metrics or being acquired by a credit-worthy entity,” according to court documents.
Centerbridge responded with two more offers, but the second happened a month after the listing agreement expired, so FreshDirect claims that that also didn’t trigger the breakup fee.