Ark Partners looks to block Mansfield lease termination

Mansfield Hotel
Mansfield Hotel

Ark Partners have asked a Manhattan Supreme Court judge to block the termination of the ground lease at the historic Mansfield Hotel. Ark Partners has been trying to sell the midtown property since late last year.

In court papers filed Wednesday, Ark Partners says the owners of the ground lease, including investor Hyman Jacobs, issued a default notice in December based on two outstanding building code violations, which the plaintiffs say is a pretext to block the sale.

Ark says if the default was allowed to go through, the firm would lose $12.25 million that it initially invested in the ground lease and another $8 million it spent to upgrade the 126-room hotel at 12 West 44th Street.

“Landlord’s default notice is a transparent ploy to “shake down” Mansfield on the basis of a technical violation that existed for decades before Mansfield acquired its leasehold interest, and that it knows Mansfield is in the process of curing,” attorney Matthew Parrott wrote in the petition.

The judge reviewing the petition issued a Yellowstone injunction late Wednesday.

According to court papers, in 1994 the landlords, which at the time included Charles Zarucki, Baruch Mappa and S. Silverberg, entered a 49-year ground lease with hotelier Bernard Goldberg, who bought the property from Gotham Hospitality Group. The ground lease has been assigned twice since then, in 1998 and in 2004, when Ark took it over as the tenant and owner of the hotel.

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The Beaux Arts landmark was originally built in 1903, and is located on the city’s famed Club Row, which has included the Royalton Hotel as well as the Harvard Club.

According to court filings, the hotel had 34 building code violations and Ark has spent about $1 million to cure violations ranging from broken elevators to the hotel boiler, as well fire safety issues. The two current violations deal with a 1995 conversion of three hotel rooms into storage space and a 2012 violation issued for a rooftop office space at the property.

In November, John Yoon, president of Ark, contacted the landlord, Hyman Jacobs, and requested an extension of the hotel’s ground lease in order to allow the sale of the property, part of a larger liquidation of the Ark real estate portfolio.

As The Real Deal reported, Ark sold off several properties in recent months, including two properties on West 55th Street for $60 million, to Solly Assa.

Yoon declined to comment, citing the litigation. Attorney Matthew Parrott, representing the hotel, was not immediately available for comment.

Stephen Meister, the attorney representing the landlord, said, “We remain hopeful that we can resolve our differences and settle the dispute.”

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