[Updated at 5:05 p.m. with information on who the developers were in talks with]
Taconic Investment Partners has filed a $4.38 million lawsuit against the developers of the West Village’s Printing House condominium, alleging they were used as a “stalking-horse bidder” on a deal to buy 104 unsold units, when the true intent was to find a more lucrative deal.
Taconic, in a suit filed in Manhattan Supreme Court April 18, alleges that the developers, Mountbatten Equities, led by investors Winthrop Chamberlin and Barnet Liberman, offered the units at 421 Hudson Street for $77 million, but moved on to another bidder, after several weeks of negotiations.
“During the negotiations, defendants and Mountbatten’s exclusive agent represented to Taconic that all material terms had been agreed to and Mountbatten was committed to consummating a deal with plaintiffs,” wrote Taconic’s attorney, Janice Mac Avoy of Fried Frank, who alleged in court papers that Taconic was preparing to close the deal. “In fact,” she wrote, “defendants did not have any intention of selling the condominium units to plaintiff.”
Mac Avoy alleges that Mountbatten received a better offer from another party, but she does not identify who that other party is.
Sources familiar with the deal said the developers were in talks with a joint-venture team that included Angelo Gordon & Co., which just last month partnered with Vantage Properties on a $245 million acquisition of an 2,200-apartment portfolio in Plainsboro, N.J. Angelo Gordon officials declined to comment.
According to the complaint, Mountbatten Equities originally converted the property, a former industrial printing house dating back to 1911, into condos in 1979. In November 2010, they began marketing the 104 units through Grubb & Ellis. Neil Helman, executive vice president and one of the exclusive Grubb & Ellis brokers, declined to comment.
Taconic says in the court papers that it offered $75 million for the unsold shares on Nov. 18, 2010, and by Nov. 24, it received a proposed form of contract from Grubb & Ellis. The form was sent to two other parties that Taconic says made similar offers.
Liberman met with representatives of Taconic on Dec. 9, and the two parties traded drafts of the contract until Jan. 1. Later in December, an agreement was reached and Liberman and Chamberlin met with Charles Bendit, a principal of Taconic, shaking hands with him and later on in the process held a toast to the agreement.
Taconic claims, based on the agreement, it secured financing for the deal and met again with the developers Jan. 11, 2011, to finalize the deal. On Jan. 12, Grubb & Ellis circulated a term sheet stating that the purchase price was $77.25 million and that a 10 percent deposit was required to secure the deal. The term sheet also called for a three-way deal with the unit owners that would allow Taconic to make physical upgrades to the property, set a closing date of Jan. 28 and allow for an extension until Feb. 28.
Taconic alleges that Liberman was in some financial difficulties and needed to conduct a transaction that would bring millions of dollars to Mountbatten Equities and its financial partners in a relatively short time. But, Taconic claims that the developers continued to delay closing, saying that the approval of their limited partners was required.
The parties met March 13, and were told that the only stumbling block remaining was approval of the condo board, but on March 31, they claim they heard that an outside buyer was close to an agreement. The building’s condo board was scheduled to meet April 8, but Taconic alleges Liberman and Chamberlin, who sit on the board, failed to appear, thus preventing a quorum.
Taconic says a deal with an outside party is imminent, but did not identify that party.
As The Real Deal previously reported, Mountbatten signed a deal with Equinox, a unit of the Related Companies, to take over its 30,000-square-foot gym in November 2010. Related officials were not immediately available for comment.
Mac Avoy did not return calls for comment and Taconic and Mountbatten officials were not immediately available for comment.