The Real Deal New York

Blackstone moves closer to 44 Wall buy after Swig settlement

Fund manager went into contract to buy FiDi office building in July

May 24, 2016 01:34PM
By Konrad Putzier and Hiten Samtani

From left: Jonathan Gray (credit:Sabina Mollot), 44 Wall Street and Kent Swig

From left: Jonathan Gray (credit:Sabina Mollot), 44 Wall Street and Kent Swig

Kent Swig and Asher Zamir settled their lawsuit against the majority owner of 44 Wall Street Monday, clearing a major hurdle towards the building’s pending sale to the Blackstone Group.

Blackstone Real Estate Partners IV, a European real estate fund managed by Blackstone TRData LogoTINY, quietly went into contract to buy the 289,000-square-foot office building from Norwegian investment firm Obligo in July. The deal was part of a $2.7 billion real estate portfolio sale of Obligo assets in Scandinavia, Latvia, Germany and the U.S. Blackstone’s pending purchase of 44 Wall Street hasn’t been reported until today.

The closing is still delayed. A source familiar with the proceedings pointed to the overall complexity of the portfolio deal as the primary cause. But another likely complicating factor was litigation between Obligo and the building’s minority stakeholders Kent Swig and Asher Zamir.

Swig bought 44 Wall Street in 2004 with unnamed partners from Lend Lease Real Estate for $65 million. According to court records, as of November 2012 Swig held a 12.2 percent strake in the property, Zamir held 9.6 percent and an entity tied to Obligo held 78.2 percent. During the course of 2012, Obligo moved to take over the minority stakes after Swig, who was reportedly in financial trouble at the time, and Zamir failed to meet capital calls. Swig and Zamir contested the takeover in a November 2012 lawsuit, which dragged on for more than three years and left the building’s ultimate ownership structure unclear. The parties settled on Monday, court records show.

Obligo, meanwhile, is still fighting a separate lawsuit from Francis Greenburger’s Time Equities and investment banking firm Reinvest Capital over the property. The plaintiffs claim they reached an agreement with Obligo in March 2015 to buy 44 Wall Street, court documents show. Obligo elected to sell the property to Blackstone instead, and in June 2015 Time Equities sued the Norwegian firm for breach of contract. (Perhaps ironically, obligo is Latin for “I oblige.”)

On Feb. 25, a New York Supreme Court judge granted Obligo’s motion to dismiss the suit. Time Equities promptly appealed the decision.

It wasn’t immediately clear what the portfolio sale valued 44 Wall Street at, but the property’s stand-alone market value is likely well above $100 million.

Blackstone, Kent Swig and an attorney representing Time Equities declined to comment. An executive at Obligo’s New York office did not immediately respond to an email seeking comment.

The Blackstone Group was New York’s most active commercial real estate investor in 2015, scooping up Stuyvesant Town-Peter Cooper Village for $5.3 billion and a Manhattan residential portfolio from the Caiola family for $700 million, among other deals.

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