The Real Deal New York

Stellar hit with suit to halt merger of Soho office buildings

Plan for 748,000-square-foot tower is breach of contract, film-editing company claims
By Mark Maurer | July 24, 2013 04:00PM

Stellar Management’s plans to combine two Soho office buildings into one sizable tower have hit a roadblock: A tenant that occupies space in both properties has sued the landlord to stop the project.

Post-production film editing company Post Factory asked for a permanent injunction that would prevent the construction and demolition work, in a suit filed Thursday with the New York State Supreme Court. The company alleges that Stellar’s proposal to merge those buildings would cause “major unwarranted disruption to the business.”

A spokesperson for Stellar declined to comment for the article.

In May 2012, Stellar President Laurence Gluck partnered with Imperium Capital to pay $200 million for the 16-story, 320,000-square-foot building at 161 Sixth Avenue and the 10-story, 250,000-square-foot property at 233 Spring Street, as previously reported.

The architecture firm Gensler helmed the design for a single 748,000-square-foot building, with three additional floors, including a two-story penthouse office. The 20-foot-wide loading dock in between the buildings, at 231 Spring Street, would form a new center “core” containing a lobby, staircase and elevators. One of the loading docks has been torn down so far, Post Factory said.

The lawsuit cites a provision in the 233 Spring Street lease that prohibits Stellar from “materially and adversely” affecting the company’s ability to operate as a studio. Post Factory, founded in 1996 by filmmaker Alex Halpern, said in court papers the project will put operations at a standstill for at least a year and a half. Halpern declined to comment.

On Friday, Halpern’s attorney, Steven J. Cohen of Wachtel Missry, sought to expedite the injunction with a motion for a temporary halt to the construction work, also known as a preliminary injunction, as well as a temporary restraining order. Justice Peter Sherwood is scheduled to hear the plaintiff’s motion on August 1. Cohen could not be immediately reached for comment.

Halpern’s company has a 20,000-square-foot lease on the 11th floor of 161 Sixth Avenue, and a 16,000-square-foot lease on the fourth floor of 233 Spring Street, the lawsuit said. The leases expire in 2017 and 2018, respectively.

Gluck, a former attorney, intends to permanently reclaim more than 8,000 square feet of the Spring Street office to relocate elevators and related mechanical equipment, the lawsuit said.

Stellar “rejected Post Factory’s efforts to obtain specific information from defendant about the construction project to work toward an acceptable remediation plan to preserve Post Factory’s rights under its leases,” the suit said. Kossoff & Unger is representing the landlord.

Gluck was sued a little more than a year ago by the former owner of Tivoli Towers in Crown Heights for $400,000 allegedly owed in a deal. Two of Gluck’s companies bought the 33-story rental apartment building for $9.5 million in 2010.