Posted Sep 9, 2015, 8:34 PM
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NYC/NJ/Miami-Dade
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Join Date: Jul 2013
Location: Riverview Estates Fairway (PA)
Posts: 45,815
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The $600M Hudson Rise Development Becomes a Legal Nightmare
Quote:
“This deal is not going to be here forever,” Shang Dai, chief executive officer of Kuafu Properties, told his partner, Zengliang (Denis) Shan, over the phone back in the summer of 2013. “People are going to compete very fiercely on this,” he said.
Mr. Shan was about to board a plane to China when he received Mr. Dai’s call, urging him to look over the details and make a quick decision on whether or not to partake in the development opportunity at Hudson Yards, one of the largest neighborhood development projects New York City has ever seen. Mr. Shan spent his flight looking over the details of the opportunity and later called his partner when he landed to accept, Mr. Dai recalled in a July sit-down interview with Commercial Observer (before mediation rules prohibited press contact).
The development at hand would soon be known as Hudson Rise, a 320,000-square-foot hotel and condominium project, located on 11th Avenue between 37th and 38th Streets, with an estimated sell-out value of $600 million. The duo teamed up with Siras Development and BlackHouse Development, two other New York-based development firms to tackle the project. In June 2014, an affiliate of the partnership received a $60.9 million loan from UBS to finance the land acquisition and pre-development phases.
Today, Hudson Rise has become one of the most talked about developments in the city—but not in the context of its progress. A soured joint venture and its subsequent lawsuits left the plot of land on 11th Avenue vacant, court dockets full and news outlets further antagonizing tensions.
After Sean Ludwick, BlackHouse’s principal, engaged in “problematic behavior,” the firm became a silent partner in late 2014. Mr. Ludwick’s behavior mushroomed into a full blown criminal matter in Sag Harbor, N.Y., when he was accused of drunkenly crashing his Porsche and killing his passenger, Paul Hansen, on Aug. 30, police records show.
A few months after BlackHouse became a silent partner, Kuafu filed to dissolve its partnership with Siras (to no avail) after which Siras filed a lawsuit against Kuafu claiming that the defendant’s action was unlawful and damaging to the development. In April, an affiliate of Kuafu purchased the original acquisition loan and filed to foreclose on it on July 10, 2015. Both parties entered into mediation in late July.
“Here you have a really nasty fight between the partners and a rising real estate market,” Chris Delson, a partner in the real estate group at Morrison & Foerster who represents lenders in construction deals, told Commercial Observer. “If you see this, you usually see it in a downturn, where maybe the property is not worth what the debt is or where the investors are going to take a loss. Here, you have this big fight when the property is much more valuable than when it was initially purchased.”
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http://commercialobserver.com/2015/0...gal-nightmare/
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