Inside Michael Shvo’s Feud with Core Club

Few developers embody the boom-era ambition of Michael Shvo.

Over the last decade, he’s gone all-in on glitzy real estate projects, such as trophy office towers, luxury hotels and members-only clubs. But the past year has tested that strategy.

At the center of the storm is his ongoing feud with Core Club, the exclusive members-only group that was once meant to be a crown jewel tenant in his portfolio. The high-society club was supposed to anchor Shvo’s luxury office redevelopments in Manhattan and San Francisco. Instead, it’s devolved into a bitter courtroom war.

Core sued Shvo for $600 million last year, claiming he failed to deliver on promises tied to three lavish new locations, including space at 711 Fifth Avenue, the former Coca-Cola building, and at the Transamerica Pyramid in San Francisco, which Shvo acquired with German backers in 2020. Core Club claimed that Shvo over-promised on buildouts and even used club space for personal events and private gatherings that racked up unpaid charges.

Shvo struck back hard. In California, his team now claims Core defaulted on its lease at the Transamerica Pyramid, leaving $178 million on the table. And in New York, he’s moved to evict the club from 711 Fifth Avenue, one of his highest-profile office redevelopments.

So far, the scorecard favors Shvo. A judge recently ordered Core to pay him nearly $1 million after defaulting on a loan. Core is appealing the ruling.

Adding to the tension, Core Club filed a new lawsuit against Shvo, claiming the condition of the Fifth Avenue space is “shockingly poor” and alleging Shvo used funds designated for upgrades to the building on his personal yacht, Crains reported. An attorney for Shvo dismissed the suit as a “desperate attempt to distract from the facts.”

The spectacle has left Core swapping law firms and Shvo digging deeper into the fight, with no clear resolution in sight. And while Core Club remains mired in litigation with its landlord, the club’s former Midtown space is hitting the market.

Shvo’s ongoing feud with Core Club is just one of the battles he’s currently fighting. He’s dealt with negative headlines over his stalled Raleigh Miami Beach project. Deutsche Finance America, the U.S. arm of German investment manager Deutsche Finance Group, recently hired London-based Revetas as the manager of Deutsche Finance America, which has a $4 billion portfolio with stakes in Shvo’s firm’s trophy assets. Former Silverstein CEO Marty Burger has been tapped to be Revetas’ U.S. point person.

Shvo’s luxury-centric strategy that defined his rise is straining under today’s market realities. Office repositionings are tougher, high-end condos are slower to move and international investors are less forgiving.

For now, Shvo still controls some of the most recognizable addresses in real estate, but the question becomes how long he can hold on.

There was plenty of other real estate news this week. Oren Alexander hired Diddy’s “dream team” lawyers, Saks Global’s Beverly Hills megaproject is one step closer to becoming a reality and we take a look at the Indiana bank in the middle of a mortgage fraud scandal.

Oren Alexander hires Diddy’s “dream team” lawyers for federal sex trafficking defense

Oren Alexander has hired two new criminal defense attorneys fresh off the case of Sean “Diddy” Combs. The disgraced real estate broker tapped Marc Agnifilo and Teny Geragos, who defended the hip hop mogul, along with attorney Zach Intrater, to represent him in his upcoming sex trafficking trial. Oren faces six charges, including sex trafficking, conspiracy and aggravated sex abuse, brought by the Southern District of New York.

Saks mega-project clears key hurdle in Beverly Hills

Saks Global’s ambitious Beverly Hills megaproject cleared a key hurdle last week as the city’s planning commission approved the 3.7-acre mixed-use plan with several amendments. The development will feature 76 apartments, a boutique hotel, 45,000 square feet of office space and 64,000 square feet of retail and restaurants, anchored by a restored 1930s Saks Fifth Avenue women’s store.

Soho House goes private in $2.7B deal

Soho House, the celebrity-favorite private club operator, is going private in a $2.7 billion deal led by Tyler Morse’s MCR Hotels. Billionaire Ron Burkle’s Yucaipa Companies will keep majority control, while Morse joins the board as vice chair, and actor-turned-investor Ashton Kutcher is taking a board seat and contributing new equity.

The Indiana bank that lent to a Who’s Who of mortgage fraud players

Merchants Bank of Indiana, once a quiet regional lender, has emerged as lender to some of the players in the nation’s widening mortgage fraud scandal. The bank fueled rapid growth by lending billions annually to apartment operators, including several who have since been criminally charged for inflating financials or flipping to straw buyers.

Adams protege Jesse Hamilton resigns after indictments

Jesse Hamilton, deputy commissioner of real estate services for DCAS, has resigned. The political protege of Mayor Eric Adams, who oversaw the city’s office leases, stepped down after being indicted on a conspiracy charge related to allegedly working with Ingrid Lewis-Martin to give preferential treatment to certain developers.

Miami-Dade Property Appraiser sues developers over valuations

Miami-Dade Property Appraiser Tomas Regalado is taking some of the county’s biggest property owners to court, seeking to reverse steep valuation cuts that lowered their 2024 tax bills. Regalado’s office filed 17 lawsuits against firms, including Simon Property Group, Blackstone, Royal Caribbean, Swire, Melo Group and Midtown Development, after the Value Adjustment Board slashed hundreds of millions off their assessed market values.

Midtown Class A office tower ground lease takes 90% valuation hit

Midtown may be thriving, but the ground lease at 1140 Sixth Avenue just cratered in value, plunging 90 percent from its $180 million appraisal in 2016 to just $17.8 million today. Morningstar Credit’s valuation of 1140 Sixth Avenue now pencils out to $70 per square foot — less than the $85 per square foot the landlord once asked for rent.

Billionaire Russell Weiner expands Miami Beach luxury empire

Billionaire Russell Weiner is expanding his Miami Beach real estate portfolio with the $35.3 million purchase of a waterfront mansion on Star Island. The late Dr. David Frankel, a prominent dermatologist, owned the 11,104-square-foot, eight-bedroom mansion with his wife, Linda Frankel. It previously belonged to former talk show host and comedian Rosie O’Donnell.