The Real Deal New York

Carlton Group sues Hudson Companies over commission dispute

Howard Michaels’ firm claims it procured $100M in debt and equity for 280 Cadman Plaza
By Rich Bockmann | July 31, 2017 01:10PM

From left: Carlton Chairman Howard Michaels, Hudson Principal David Kramer and a rendering of 280 Cadman Plaza (Credit: Marvel Architects)

Howard Michaels’ Carlton Group is suing David Kramer’s Hudson Companies, claiming it’s owed $2.2 million in commissions for arranging financing for the developer’s $470 million library and condominium tower in Brooklyn Heights.

Carlton entered into an exclusive agreement in December to secure equity for the project at 280 Cadman Plaza West, according a lawsuit the real estate banking firm filed in New York State Supreme Court in Manhattan Friday. But after Hudson Companies closed on the financing for the project, it refused to pay the commission, Carlton claims.

A spokesperson for Hudson Companies emailed a statement saying, “This case has no merit and, if necessary, we are prepared to prove that in court.”

Under the terms of the agreement, Hudson would pay Carlton a 2.5 percent commission on the first $40 million in financing it secured, and 2 percent on anything exceeding that figure, according to the lawsuit.

Carlton locked down $80 million in construction financing for the project from the Related Companies’ Related Fund Management for the 36-story, 134-unit project. Starwood Property Trust kicked in an additional $200 million.

The Related fund also kicked in $20 million worth of equity, according to the lawsuit. But Carlton claims that Hudson “has refused to pay” the commission on either the debt or equity funding.

Meanwhile, Carlton said it’s owed a commission on the financing arrangement Hudson hammered out with Related for the 21-story Riverwalk residential building they are developing at 460 Main Street on Roosevelt Island.