Updated: 11:33 p.m., Jan. 17
The majority owners of 44 Wall Street have asked a judge to dismiss a lawsuit filed by affiliates of developers Kent Swig and Zamir Equities principal Asher Zamir, who claim to own a minority stake in the Financial District office tower formerly known as the Bank of America building.
In the suit, filed in November in New York State Supreme Court, Swig and Zamir claim that two entities—listed in court documents as New 44 Wall Street LLC and Kommersiella Fastigheter in NY 3 Corp—froze them out of a stake in the 23-story, 289,049-square-foot property.
Swig—the president of Swig Equities and co-owner of Terra Holdings, the parent company of brokerages Brown Harris Stevens and Halstead Property— invested $3.5 million dollars and had a 12.2 percent stake in the initial partnership, according to court documents. Zamir invested $4.3 million and had a 9.6 percent stake, while KFS, led by chief executive Paul Elliott, had an initial investment of $25 million and a 78.2 percent interest, records show.
The partnership bought the office building in 2004 from Lend Lease Real Estate Investments for $65 million, property records show.
Swig and Zamir have asked the court to order KSF to adhere to the initial operating agreement, revert to the original partnership agreement, and pay damages for an alleged breach of fiduciary duty.
However, the majority owners claim that Swig and Zamir failed to contribute capital for operating expenses and debt, in a motion to dismiss the lawsuit Jan. 11. ABS Partners Real Estate, which manages the property, recommended that the owners make an immediate payment of $5 million, which KFS made without a contribution from Swig and Zamir, they claim.
The suit “is a transparent attempt by minority shareholders to force [the majority owners] to pay more than the fair market value for their interests in that company,” the defendants said in court papers.
KFS also said that it invested an additional $5 million for upkeep and property improvements, again without contribution from Swig and Zamir. The defendants claim that the property was independently valued at between $57 million and $63 million while the mortgage on the property was $73.7 million. The valuation also found that the stakes owned by the minority partners were worth nothing.
But Andrew Miltenberg, a founding partner at Nesenoff & Miltenberg and counsel to the partnership led by Swig and Zamir, said that “KFS is attempting to create an incestuous transaction to seize my clients’ ownership interest in 44 Wall Street without a legal basis by creating an artificially low value for the property for their own financial purposes.”
Swig has had a financially and legally turbulent past few years. He is still embroiled in a bitter lawsuit regarding an alleged $200,000 personal loan default with his estranged former father-in law, developer Harry Macklowe, as The Real Deal previously reported. This past June, Bank of America sued Swig to recoup unpaid loans on his duplex apartment at 740 Park Avenue. And in August, Swig filed a suit against the owners of Demi Monde, a bar and restaurant at 90 Broad Street, alleging nonpayment of rent. Asher Zamir has also been involved in a lawsuit over a $150 million note sale on Setai Wall Street, a 34-story office property in the Financial District, as The Real Deal previously reported.
Representatives for KFS could not immediately be reached for comment.