Jack Terzi, China Sonangol back in court over 23 Wall Street
Judge awards Terzi injunction to stop lease termination at century-old building until lawsuit plays out
Jack Terzi’s quest to occupy a Gilded Age Wall Street building is fit for a Hollywood movie, with its latest act playing out in New York Supreme Court.
Terzi attempted to buy 23 Wall Street — the former longtime headquarters of JPMorgan and the scene of the Gotham City Stock Exchange in the 2012 film “The Dark Knight Rises” — for $140 million in 2016. His company even put down $17 million in escrow.
But the escrow agent froze Terzi’s funds and the deal never closed. Since then, Terzi and the building owner, China Sonangol, have been in heated litigation. Terzi blamed Sonangol, alleging that the escrow agent could not close the deal because of concerns about the landlord’s ties to controversial Chinese-Angolan oil magnate Sam Pa, who was placed under U.S. sanctions in 2014 for his role in what the Treasury Department termed “undermining Zimbabwean democracy.”
China Sonangol and Terzi eventually reached a compromise in 2019. Terzi would enter into a triple net lease with Sonangol with a 99-year option, while Sonagol would remain the building’s owner.
But the truce did not last.
Terzi and China Sonangol are now back in court over an alleged default under the lease agreement. This time, the lawsuit was filed by an entity affiliated with Terzi in New York Supreme Court in August. The Terzi entity alleged that China Sonangol sent a notice of default for unpaid rent due in June and gave Terzi until August to pay or risk the lease being terminated.
But the Terzi entity alleges that China Sonangol miscalculated the rent it is owed and that the lease provided for a 15-month period of free rent. During that free rent period, the tenant would access its escrowed money to make required improvements to the building. Terzi alleges that because the funds from the escrow account were not released until last November, the free rent period should last until April 2022.
The Terzi entity was awarded a “Yellowstone Injunction” by a judge, temporarily halting any action by the landlord, including a lease termination, until the court process plays out.
In a hearing in late August, the landlord’s lawyer alleged that the free rent period should have begun much sooner, since the release of the escrow money began in January 2020, not November. It also alleges that the Terzi entity has been collecting rent from its subtenant, luxury retailer Hermes, but has not paid the landlord any rent during the disputed time period.
An attorney representing China Sonangol declined to comment, citing pending litigation.
“Despite a six-year history of dealing with a difficult counter-party, the Covid-19 pandemic, and now having to fight off baseless rent demands, our client remains committed to breathing new life into this historic asset, with a $20 million capital improvement project and construction to begin imminently to be able to deliver the space to tenants by Q3 2022,” said Y. David Scharf of Morrison Cohen, who is representing Terzi along with Christopher Milito.
Milito, also of Morrison Cohen, added “This is unlikely to be the only litigation between us and the landlord.”
China Sonangol bought the landmarked building in 2008 from Lev Leviev’s Africa Israel for $150 million. It’s been little more than an empty shell across from the New York Stock Exchange since then, sitting dormant for a number of years after JPMorgan moved out. Built between 1913 and 1914, the building spans 150,000 square feet.
Terzi, a native of Gravesend, Brooklyn, founded JTRE Holdings in 2008. His other projects include the 2015 conversion of a parking garage at 240 East 54th Street to a retail space. Terzi’s company also owns 1000 6th Avenue, the site of the first Chick-fil-A in New York City.