Carl Dranoff Accuses REIT, South Jersey Political Heavyweight Of 'Shakedown' Over Camden Apartment Building
A prominent Philadelphia developer has leveled a startling accusation at what used to be another of the region's commercial real estate heavyweights.
Carl Dranoff, whose company Dranoff Properties has developed some of the most expensive condos in Philly, alleged in a lawsuit deposition over tax breaks for a Camden apartment building that Liberty Property Trust pressured him to include influential South Jersey businessman George Norcross in a development partnership, the Philadelphia Inquirer reports.
Dranoff sued the city of Camden for delaying the transfer of a tax agreement that was needed to complete the sale of The Victor, a loft apartment building on the Camden waterfront, to Apartment Investment Management Co. in 2018 as part of a $445M sale of all of Dranoff's Philly area rental properties. As Camden allegedly refused to take legally required action to transfer the tax agreement, the building (and its $71M price) ultimately was excluded from the sale, the Inquirer reports.
Dranoff Properties purchased and redeveloped the former RCA Victor record factory in 2002, a deal that included an agreement to cap tax payments at $200K per year on the property and an easement preventing any development that would block the building's view of the Delaware River. When Liberty Property Trust amassed acres of waterfront land with the purpose of building a mixed-use development district, it approached Dranoff in 2016 about becoming the multifamily partner on the project, and he agreed, the Inquirer reports.
Dranoff won tax credits to build a new apartment building and hired an architect before Liberty approached him and said that Norcross had become its partner on the entire project, he said in the deposition. When he refused and instead asked to be bought out of his development rights for the new multifamily project and the easement for the Victor, Norcross ultimately resorted to "name-calling and some pretty aggressive and obnoxious behavior against us," Dranoff said.
While Dranoff agreed to sell the rights to Liberty for $1.5M, he contends that the price was far below what he believed fair and was mainly to stop what he called a "shakedown," he said in the deposition. City officials admitted under oath in separate legal filings that Philip Norcross, a powerful development attorney in Camden and George's brother, requested that the city delay its dealings with Dranoff in "almost weekly" meetings, the Inquirer reports.
George Norcross and Liberty's partnership eventually came to its own ignominious end, as Conner Strong & Buckelew, the insurance company of which he is executive chairman, ultimately selected another partner for the construction of its joint headquarters with developer The Michaels Organization and logistics firm NFI. Norcross eventually amassed 10 acres, where it developed the Ferry Terminal office building and a new multifamily project built with Dranoff's development rights.
Liberty exited the project as part of its broader pivot away from all non-industrial real estate sectors, and its land sales to Norcross have also come under legal scrutiny for being below market rate. Conner Strong received $290M in tax breaks for its waterfront projects, including roughly the full cost of its joint headquarters, through the state's Grow NJ program. In December, the Inquirer reported that Parker McCay, the law firm run by Philip Norcross, drafted parts of the legislation that created Grow NJ before representing George Norcross in his applications for those tax breaks. The legislation was co-sponsored by Rep. Donald Norcross, another of George's brothers, who was then a state representative.
Dranoff in his testimony accused the Norcross family and Liberty of carrying out a "vendetta" against him in the development rights negotiations and the delay on the Victor tax break transfer. Camden Mayor Frank Moran called the lawsuit an attempt to "deflect attention from his own failures" to develop Camden's waterfront and claimed Dranoff "pocketed" the tax break he was given in 2002, the Inquirer reports.
In October 2019, Prologis acquired Liberty for over $12B in an all-stock transaction.