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SL Green is taking legal action to get its hands on a $35M security deposit that the prospective buyer of Manhattan's Daily News paid before bailing out of the deal in March.
Jacob Chetrit had agreed to pay $815M for the building at 220 East 42nd St. last year. However, Chetrit’s lender for the deal withdrew its support back in March, which killed the purchase.
SL Green filed a lawsuit this week in the state Supreme Court in Manhattan, asking a judge to award it the $35M deposit, alleging that Chetrit is in default of its obligation to buy the property, Crain’s New York Business reports.
The company is requesting the deposit be released from an escrow account handled by Fidelity National Title Insurance Co., a co-defendant in the suit, according to Crain's. An attorney for Chetrit wrote to Fidelity, rejecting SL Green’s accusation and asking that it continue to hold the deposit. Fidelity, for its part, said it won’t release funds until it has authorization from both sides or a "final determination of the rights of the parties in an appropriate proceeding."
SL Green bought the 37-story building in 2003, paying $265M. This particular sale would have been one of the biggest of the year in an otherwise stalled investment sales market in the city. After years of sales declines, the pandemic is expected to push volume even further down. Dollar volume and the number of transactions in the first quarter of the year were relatively firm on last year’s number, but the lockdown in the city is expected to have a significant impact on deal flow.
Some $4.4B of sales were recorded in the first three months of the year in Manhattan across 65 transactions, according to Avison Young figures, though brokers predict this year could be the worst for investment sales in over a decade.
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