The Real Deal New York

Ashkenazy sues Denihan for allegedly backing out of Surrey Hotel deal

Dispute stems from planned sale of stake in ground lease at UES property

July 24, 2014 03:30PM
By David Jones

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Ben Ashkenazy and 20 East 76th Street

Ben Ashkenazy and 20 East 76th Street

An entity led by investors Ben Ashkenazy and Michael Alpert is scheduled to face off with Denihan Hospitality Group in Manhattan Supreme Court after the investment firm claimed that Denihan backed out of a deal to sell a 49 percent stake in the ground lease at the Surrey Hotel.

Ashkenazy and Alpert, the chairman and president of Ashkenazy Acquisition Corp., claim in a July 22 lawsuit that Denihan, led by Brooke Barrett and Patrick Denihan, obtained new financing for the 20 East 76th Street hotel without their consent — and then backed out of the transaction with Ashkenazy.

Alpert, in a sworn affidavit, claims that he and Ashkenazy contacted Denihan on July 2 to inquire about the delay in closing the deal.

“It was during that conversation, plaintiff learned that defendants were no longer desirous of consummating the deal as they no longer saw it as beneficial to them,” Alpert said in the court filing. “Defendants no longer needed plaintiff for the financing aspect of the transaction and the real estate market had been improving steadily since the parties first entered into the agreement back in July 2013.”

The plaintiffs will ask the court to block any transfer of the ground lease in an Aug. 15 hearing before Judge Jeffrey Oing.

Officials from Denihan said the deal was not consummated due to the inability to get consent from the ground lessor.

“The transaction was subject to third party consent, which was not granted,” said a spokesperson for Denihan Hospitality.

Ashkenazy, a real estate investment firm with more than 100 properties valued at about $5 billion in total, first entered an agreement with Denihan to buy a 50 percent stake in the ground lease on July 29, 2013, according to court records. The deal had a closing date of Aug. 31, with a provision for an extension of up to 120 days.

The parties agreed to a further extension as an existing loan on the property was maturing. But the plaintiffs claim that Denihan entered a deal with Canadian Imperial Bank of Commerce in May 2014 for new financing. They claim the funding was arranged without the written approval of Ashkenazy, which was operating under a single purpose entity called 2BSurrey.

The agreement between the Ashkenazy unit and Denihan was later modified from 50 percent to 49 percent at the request of the ground lessor, according to court filings.

Ashkenazy has been on an acquisition tear in recent months, buying up the retail condos at Philip House in the Carnegie Hill section of Manhattan in February. In January, the firm agreed to buy the leasehold at 200 Central Park South from Bernard Spitzer for $18 million.

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