New York City-based real estate investment firm Ashkenazy Acquisition, headed by young mogul Ben Ashkenazy, has sued the owners of a retail condominium at 1991 Broadway, after signing a contract to pay $28 million for the property.
The family firm that owns the property claimed there was no special permit restricting use of the city-owned interior atrium with public seating at the building, according to the suit, filed April 26. In fact, Ashkenazy alleges, the permit not only existed but had been violated several times by the owners as recently as 2008, making them aware of its existence.
Ashkenazy Acquisition entered into a contract for the property, formerly home to Chinese eatery Ollie’s, in March, having submitted a $1 million deposit into escrow, the complaint says.
Alan Phillips, who heads the family-based company selling the property, told The Real Deal that Ashkenazy certainly knew of the special permit before making the deal. Phillips had been advised by his brokers to go for Ashkenazy’s deal over several other offers because the mogul would likely close quickly, he said.
“Before he went into contract, we told him to do all his due diligence, he said.”My position is that he was fully aware there was a special permit.”
Ashkenazy’s attorney, Kevin Nash, said the company would prefer to move forward with the deal but wants to “enforce the contract.” Ashkenazy himself did not immediately respond to a request for comment.
The condo, between West 67th and West 68th streets, had been on the market since February and was marketed by Oklahoma-based commercial brokerage Stan Johnson Company, asking $39.5 million. Stan Johnson executives Jason Maier and Jeff Karp declined to comment on the suit.
The retail condo totals 7,500 square feet, including 3,000 square feet on the ground floor; 2,000 square feet on the mezzanine level; and 2,500 square feet in the basement, The Real Deal previously reported. Union Square Hospitality Group CEO Danny Meyer was reportedly eyeing the unit, at the base of the Bel-Canto condo building, for his new Upper East Side restaurant in January.
Phillips said he wanted to be careful not to “bad-mouth” Ashkenazy.
“I would say nothing about his character,” he said, “other than that he’s smarter than we are.”
Ashkenazy has asked the court to compel the seller to remove the special permit or return the company’s deposit, plus interest and damages to be determined by the judge.
If the special permit must remain in place, Ashkenazy wants the price of the property to be reduced to make up for the alleged drop in value caused by the existence of the permit. In the meantime, he wants the escrow agent to be prevented from releasing the deposit to the seller.