The Real Deal New York

RXR closes on $500M purchase of 620 Sixth

December 30, 2011 04:42PM
By David Jones

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From left: 620 Sixth Avenue, developer Yair Levy and Scott Rechler, chairman and CEO of RXR Realty

An investor group that included developer Yair Levy has officially closed on the $500 million sale of an office and retail complex 620 Sixth Avenue to RXR Realty on Tuesday, and the troubled investor deposited $8.1 million in proceeds into an escrow fund to repay his former Rector Square condominium.

A state Supreme Court ordered the transfer after Levy was found guilty of illegally spending millions of dollars from the Rector Square reserve, and last month lawyers for the condo filed a new lawsuit alleging the developer illegally transferred real estate and other assets to his wife and family to salvage his crumbling empire.

Lawyers for Rector Square were granted a temporary restraining order on Levy in the middle of the month to prevent him from transferring any additional assets, which would be used to collect on a $7.4 million judgement stemming from a suit by the state attorney general.

Levy was accused of transferring his 20 percent stake in 620 Sixth Avenue, which he owned with investors Joseph Chetrit and Charles Dayan, to his wife Sony, one of several family members that worked closely with Levy in his multi-million dollar real estate business, which included several high-profile condo projects and commercial buildings.

The 700,000-square-foot tower was one of the highest-profile retail complexes in Manhattan, housing TJ Maxx and Bed, Bath and Beyond big-box stores. Under the agreement, RXR is buying a controlling stake in the building and the partners will retain a minority share.

Levy, who originally bought Rector Square, a 303-unit tower from Related Cos., lost the building to Anglo Irish Bank in a 2009 foreclosure, and then sold back to Related. The project was foreclosed on after contractors walked off the job in late 2008, and The Real Deal uncovered numerous instances of improper financial dealings at the building, including using unsold apartments as extended-stay hotel rooms and failing to pay millions of dollars in taxes and common charges.

Lawyers for Rector Square claimed that Levy had been dumping other assets, including his home in Kings Point, L.I., and South Florida, for below market rates, while struggling to pay off millions of dollars in defaulted loans and other debts. They slapped restraining notices on more than 30 corporate entities owned by Levy, but were unable to properly serve a notice on him, alleging that he and his wife went into hiding to avoid being served.

“Our process server, when attempting to serve Mr. Levy with a notice of judgment debtor, called Mr. Levy on his cell phone, told him that he had a package for him, and Mr. Levy said he does not accept packages from some people and would not tell the process server where he was or give him an address to deliver the package at,” Brian Belowich, attorney for Rector Square, told the court in a Dec. 20 hearing.

Lawyers for Levy called the moves by the Rector Square lawyers frivolous, according to the court transcript, but Judge Joan Lobis, who rendered the original verdict in the reserve fund case, told the court that Levy appeared to be purposefully avoiding service.

“I love due process,” Lobis told the court. “It’s a wonderful part of our jurisprudence, but there’s a point at which due process is not protecting anyone, but its making kind of a mockery of the system.”

Legal sources confirmed that the funds were deposited into the escrow fund, and a hearing is scheduled for next Tuesday.

Neither Rex Whitehorn, the attorney for Levy, nor Turner Smith, the attorney for Levy’s wife, were immediately available for comment. Officials at the attorney general’s office were not immediately available for comment.

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