Mezzanine lenders at 295 Madison Avenue have filed suit against Westbrook Partners and the Moinian Group, seeking a $21 million judgment after a dispute broke out over whether the investors were granted a loan extension for the office tower.
The lenders, Brickman Real Estate and Capital Trust, in a lawsuit filed Aug. 6 in New York State Supreme Court, are demanding the investors pay back the $20.7 million loan after a dispute erupted over whether they agreed during a series of meetings earlier this year to extend the loan, which matures Sept. 9, less than a month from today.
“While Brickman expressed a willingness to discuss potential extension terms, no specific terms were proposed by borrower at that meeting or at any time prior to the July 16 letter [from 295 Madison lawyers to the lenders],” wrote attorney Matthew Parrott, who represents the lenders in the case.
In 2007, Westbrook and Moinian, who have worked together on other deals, acquired 295 Madison, located at the corner of 41st Street, for $180 million from the family of the late real estate investor Sarah Korein. Court records show that Westbrook and Moinian invested nearly $43 million into the property to build a new lobby, restore the Art Deco façade and upgrade the elevators, as well as make other improvements.
“The suit is the oddest thing I’ve ever seen,” Stephen Meister, attorney for Westbrook and Moinian, told The Real Deal. “It is a suit by a lender before the maturing date asking for a declaratory judgment that the borrower can’t extend.”
According to court documents, lawyers for 295 Madison opened discussions in December 2009 to get an extension on the maturity date of the loans. The loans included a $67 million senior mortgage, and a total of four mezzanine loans, including one for $23.3 million, a second piece for $33.9 million and two for $20.7 million.
Court records show that Capital Trust, which owned one of the two $20.7 million loans, received an unsolicited offer for the loans, and then reached an agreement with Westbrook and Moinian to buy the note for $6 million. In court documents, Meister claims that Brickman and Capital Trust then reneged on a deal to extend the September maturity date, and he told The Real Deal that the attempt to call in the loan prior to the deadline was “stupid” and “predatory.”
Moinian officials did not return calls regarding the case. Parrott declined to comment beyond confirming the complaint had been filed. Westbrook officials declined comment, except to say: “As of today Westbrook Partners has not been served any papers with regards to this lawsuit.”