The Real Deal New York

HFZ, Vornado owe Abro a $15M cut of Marquand’s sales: suit

Developers bought 11 East 68th for $170M in 2011
By E.B. Solomont | November 29, 2017 06:00PM

From left: The Marquand at 11 East 68th Street, Steven Roth and Ziel Feldman (Credit: Getty Images)

Richard Scharf’s Abro Management unloaded the Marquand more than five years ago. But in a new lawsuit, the firm claims that current owners HFZ Capital Group and Vornado Realty Trust owe it nearly $15 million in proceeds from the condominium’s sales.

Abro, a Long Island-based investment firm, sold the building at 11 East 68th Street to Vornado and HFZ in 2011 for $170 million, nearly $22 million less than Abro paid in 2008 at the top of the market. Vornado controls the retail portion of the building, while HFZ converted the property’s 41 rental units into 26 luxury condos.

The suit claims that HFZ and Vornado agreed to pay Abro a “participation” fee — in other words, a portion of the sales proceeds for certain units — payable on the fifth anniversary of the deal. When the Marquand hit the market in 2013, there were 18 such units, and by December 2016, 14 had sold. Last year, Hirschfeld Properties paid $37.5 million for a triplex penthouse that was asking $46.5 million.

However, Abro says HFZ and Vornado have yet to fork over the $14.9 million it is owed related to those sales. In addition to its cut of the condo sales, Abro is claiming $31.4 million in damages, according to the complaint.

Representatives for HFZ and Vornado did not immediately comment.

It’s unclear how many sponsor units remain at the Marquand, where prices ranged from $15 million to $46 million. There is one sponsor unit on the market, according to StreetEasy, that’s asking $17.9 million.

In the complaint, Abro claims that leading up to Dec. 29, 2016 — the fifth anniversary of the closing — the developer intentionally kept four units off the market to avoid paying Abro its share of the proceeds. One of the units was the other penthouse, asking $43 million, which the suit claims HFZ’s Ziel Feldman is now altering for his own use.

The suit also claims HFZ wildly underestimated Abro’s cut by “underreporting the sales prices paid for units,” incorrectly calculating the square footage of the units and improperly subtracting concessions from sales prices.