The Real Deal New York

Blackstone sues Sol Goldman estate over default notice at 1140 Sixth Avenue

By David Jones | August 29, 2011 06:24PM

1140 Sixth Avenue and Sol Goldman

[Updated at 11:35 a.m. on Aug. 30 with information from DOB and the FDNY] Blackstone Group, which acquired the ground lease at 1140 Sixth Avenue in May, has filed a lawsuit against the landlord to block a default notice it received for five alleged violations issued by the New York Fire Department.

Blackstone, in an Aug. 26 complaint filed in New York State Supreme Court, alleges that the estate of billionaire Sol Goldman, which owns the building, between 44th and 45th streets, sent it a default notice June 30, claiming it had 12 outstanding FDNY violations, nine Department of Buildings violations and two Environmental Control Board violations.

The default notice required that the defaults must be cured by this Wednesday, or the tenant would face a termination of its lease. Blackstone’s lawyers sent a letter to the landlord requesting an extension on the deadline, and also asked that the matter be taken to arbitration, but has not heard back from the landlord.

“All that remains is for the FDNY to process tenant’s and its own inspector’s paperwork and update its database [possibly following a further inspection of the premises],” said Kramer Levin attorney Natan Hamerman, who represents Blackstone in the complaint.

Blackstone says in the suit that all of the violations were incurred by Laurence Gluck’s Stellar Management, the previous holder of the ground lease, and that it has addressed all of them except five FDNY violations. The firm also says that the lease allows the tenant time to fix the violations and that it has the right to take the matter to arbitration.

In March, Blackstone beat out 30 other bidders to acquire the $116 million in defaulted debt, which was previously held by Stellar Management and the Rockpoint Group.

As The Real Deal previously reported, Blackstone paid a little less than $100 million for the leasehold, which values the 191,000-square-foot building at $523 a square foot.

Stellar and Rockpoint originally bought the building in 2006 for $97.5 million, taking out a $116 million loan from Lehman Brothers. Lehman made an additional mezzanine loan of $12.9 million, but transferred the debt to German lender Landesbank Baden-Württemberg.

Holliday Fenoglio Fowler brought the loan to market in January, after Stellar and Rockpoint stopped making payments on the debt and got into several lawsuits with the lender, alleging they withheld funds designated to renovate the property.

DOB records show there are no outstanding violations at 1140 Sixth Avenue and a spokesperson said that any outstanding FDNY violations would be handled by that department. Officials at the FDNY said that any information regarding outstanding violations would have to be released through a written request.

Blackstone filed a similar suit last Tuesday involving a default notice over 36 alleged violations at the London NYC hotel at 151 West 54th Street. Blackstone claims that most of the violations have been fixed and that it is waiting for paperwork from DOB to fix nine other violations.

In that case, the landlords are members of Goldman’s family, operating under the names Goldestate and Goldprop and the plaintiff claims that the estate is responsible for several remaining violations.

Stellar officials were not immediately available for comment, nor was Blackstone or its lawyers. Officials from the Goldman estate were not immediately available for comment. Rockpoint officials could not be reached for comment.

Additional reporting provided by Adam Pincus