Siras accuses Kuafu of plotting to boot them from Hudson Rise
Sumaida, Verma claim that Kuafu's media statements violated operating agreement
Real estate litigations, like deaths, often come in threes. In the tale of the condo-hotel project known as Hudson Rise, the latest twist is that Siras Development is suing Kuafu Properties, arguing that Kuafu’s move to dissolve the joint venture is unlawful and damaging to the 47-story project.
Siras principals Saif Sumaida and Ashwin Verma allege in a suit filed yesterday that Kuafu had plotted to boot them from the partnership for months, prior to the petition filed last month. The suit also arrives just after Sean Ludwick sued Sumaida and Verma, his former BlackHouse Development partners, for allegedly freezing him out of projects.
Sumaida and Verma are seeking $50 million in damages from Kuafu, a New York-based Chinese development firm. In the suit, they allege that Kuafu’s recent comments in the media breach the partnership’s operating agreement.
The suit cites a New York Daily News article in which Kuafu’s attorney, Larry Hutcher of Davidoff Hutcher & Citron, described the partnership as a “bad marriage.” Siras claims Kuafu’s public statements negatively impact any prospect of maintaining financing and obtaining new financing.
“One would not, however, expect Kuafu to devalue the property — and put the majority of the Project’s financing at risk — by commencing a public dissolution proceeding [and] refuse to take incremental and obvious steps that would increase the property’s value, or even meet to discuss these steps,” the lawsuit states.
In June 2014, the development team’s entity Bifrost Land LLC entered a loan agreement with UBS Real Estate Securities to borrow about $60.9 million — including $44 million that would be drawn at closing — to purchase the property. In the suit, Siras claims the UBS loan has an initial maturity date of July 9 and that the public comments will make UBS less inclined to extend the loan.
Tom Mohen, a lawyer for Kuafu, responded to the claims with a statement: “We disagree with the allegations and we consider this legal posturing. Larry Hutcher responded to a reporter’s request for comment, so we don’t think there’s any basis for such claims.”
Kuafu CEO Shang Dai told TRD last month that Kuafu would provide “most of the equity” for the 420,000-square-foot project, around $135 million. According to Kuafu’s petition, the tower at 462-470 11th Avenue is slated to have a total sellout of $600 million.