The Real Deal New York

SL Green, Moinian deposit 3 Columbus loan payoff, dare lender to turn it down

November 29, 2010 03:25PM
By David Jones

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From left: Joe Moinian, SL Green CEO Marc Holliday, Deutsche Bank CFO Stefan Krause, Related CEO Stephen Ross and 3 Columbus Circle

SL Green and the Moinian Group last Wednesday said they deposited $258.6 million to settle the 3 Columbus Circle foreclosure case with Deutsche Bank and Related Cos., and warned that if the lender refuses the payoff it will trigger a protracted court battle.

Deutsche filed suit earlier this year to foreclose on the project, alleging Moinian defaulted on $250 million in mortgage loans at the 26-story tower. Moinian later filed a $200 million counter suit, alleging Deutshe engaged in a predatory scheme to let Related — which acquired the debt in a joint venture with Deutsche — foreclose on the building, demolish the existing site and redevelop the property in a hotel and office complex anchored by a Nordstrom’s department store.

Moinian claimed, in court documents, that it was willing to pay off the loan balance, but Deutsche and special servicer CW Capital refused to let it sign new tenants and also demanded an additional $54 million prepayment penalty. Lawyers for Moinian warn that Deutsche has until a Dec. 6 legal deadline to accept the deposited funds, or it will face a new lawsuit over the $54 million penalty.

“They’d better be goddamn sure they’re going to win the $54 million if they turn down the offer,” said Stephen Meister, Moinian’s attorney.

A cashier’s check for $258.55 million was deposited with the county clerk of New York. If the payment is accepted, SL Green, which paid the amount, would become an investor with Moinian in the property.

Moinian and Related Chairman Stephen Ross faced off in New York State Supreme Court earlier this month, but failed to come up with an agreement on how to resolve the dispute.

According to documents filed in New York State Supreme Court, Deutsche is already holding almost $6 million in rents collected from tenants at 3 Columbus Circle, a building previously known as the Newsweek building with an address of 1775 Broadway.

Related officials were not immediately available for comment and nor was the company’s attorney, Mark Walfish. Deutsche declined to comment.

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