CBRE Sues FreshDirect for $400K Breakup Fee on Attempted Bronx HQ Sale

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Breaking up is hard to do.

CBRE sued FreshDirect to get its $400,000 breakup fee for the attempted sale of the company’s Bronx distribution center and headquarters, court records show.

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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.