I was blindsided by 90 Broad Street sale: Swig

Developer's lawsuit claims he first learned terms of the $126M deal in TRD
By David Jones | November 18, 2013 11:34AM

Developer Kent Swig has claimed that JPMorgan Chase, a lender at his Lower Manhattan office tower at 90 Broad Street, sold it out from under him for $126 million. They will face off in court tomorrow, where Swig aims to stop the deal from going ahead.

Swig won a temporary restraining order on Friday, which puts the sale on hold at least until the hearing, where both sides will present arguments over whether the deal should go through.

Swig sued JPMorgan in New York State Supreme Court on Thursday, alleging the bank signed a deal last month to sell the 393,000-square-foot building to investor David Tawfik’s Princeton International Properties — without first giving him a chance to make a counteroffer. The move violated a “last look” provision in a 2006 agreement that gave Swig the right to put forward his own bid if the bank moved to sell 90 Broad to a third party, the suit claimed.

A spokesperson for JPMorgan declined to comment, as did Swig. Tawfik did not return calls.

Under the terms of the agreement, Swig allegedly had the right to match the sale price before JPMorgan could sell. “If the notified party fails to exercise this ‘right of first offer,’ then — and only then — may the notifying party sell the property to an unaffiliated third party,” an attorney for Swig said in an affidavit.

However, Swig claims he first gleaned the terms of the transaction from The Real Deal, which on Nov. 13 summarized an original report from the New York Post.

Swig agreed to buy 90 Broad from developer and landlord Rockrose in November 2005 for just under $90 million. An entity called 90 Broad Street Realty, formed in December 2005, officially acquired the property. That entity was controlled by an affiliate of JPMorgan, which contributed $4.7 million in mezzanine loans and also loaned $86 million to the property through a securitized loan pool, according to court documents.

Swig said he first learned of the sale in an Oct. 22 letter from the JPMorgan affiliate, which said it planned to sell the building but did not disclose the identity of the buyer or the terms of the deal. The suit alleges breach of contract and breach of fiduciary duty.

JPMorgan officials claimed in an Oct. 29 letter that they had the sole authority to sell the building and didn’t need Swig’s approval, the developer said in court papers.

Swig has run into legal troubles in connection with 90 Broad before.

In January, Manfra, Tordella & Brooks, a precious metals wholesaler and retailer that operated in the basement, filed a $4 million suit alleging the landlord failed to secure the property against Hurricane Sandy-related flooding, though the building owners countered that they could not prevent an act of God and the tenant did not take precautionary measures.

In August, L&H Group, a Long Island City-based contractor, filed suit to foreclose on a $575,000 mechanic’s lien for work related to restaurant Demi Monde, which formerly operated on the ground floor. Swig had sued the restaurant in August 2012 for allegedly failing to pay $100,000 in back rent.

Princeton International previously acquired 104 West 40th Street from Savanna for $103 million.