AmBase may try to sell its 111 West 57th Street “interest”
Investor is suing the tower’s developers
Does anyone want to buy some lawsuits? AmBase Corporation, an investor in the supertall condominium project 111 West 57th Street, is considering selling its stake, according to a new filing with the U.S. Securities and Exchange Commission.
There’s just one catch: AmBase no longer owns a stake following the tower’s August foreclosure. The Connecticut-based holding company is currently fighting the new owners in court, alleging the foreclosure was illegal and that it is owed a $136 million payout. In other words: the buyer of AmBase’s “interest” would really acquire a legal claim, and the privilege of possibly spending years in court.
“With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is continuing to pursue various legal courses of action, as well as considering other possible economic strategies, including the possible sale of the Company’s interest in and/or rights with respect to the 111 West 57th Property,” AmBase wrote in the filing, published Wednesday.
It wasn’t immediately clear how seriously the company is considering a sale, and whether it has talked to any potential investors. The firm could not immediately be reached for comment.
A number of hedge funds, such as Bill Ackman’s Pershing Square Capital Management, are known to occasionally buy cheap assets with a potentially lucrative legal claim.
AmBase bought a 59 percent stake in 111 West 57th Street, the future second tallest building in the Western Hemisphere by roof height, for $56 million in 2013. But the firm later fell out with the building’s developers, Michael Stern’s JDS Development and Kevin Maloney’s Property Markets Group. Amid the dispute and cost overruns, the tower’s mezzanine loan fell out of balance in early 2017. In August, the tower’s most junior lender, Spruce, took over the property through foreclosure. Sources say Stern and Maloney are a part of the new ownership structure.
Two lawsuits are ongoing. In one, dating back to 2016, AmBase claims Stern and Maloney are required under the terms of their joint-venture agreement to buy out its stake for $136 million. A second lawsuit, this one against Spruce, claims the August foreclosure was illegal and seeks to restore AmBase’s interest in the tower. Earlier this month Spruce notched a victory, when a judge denied AmBase’s request to reverse the foreclosure through a temporary restraining order.
Apart from 111 West 57th Street, AmBase’s only asset of note was a 14,500-square-foot office building in Greenwich, Connecticut. On Jan. 26, the company sold it for $5.2 million, according to the filing.
AmBase’s market cap as of Wednesday afternoon was around $15 million, which implies investors think its chances for a quick legal victory are slim. The firm’s CEO, Richard Bianco, agreed last year to fund the litigation with $7 million out of his pocket. In return, he would land between 30 and 45 percent of any damages awarded, on top of his investment.