RXR Sues Over Deal for Stake in N.Y.'s Worldwide Plaza

Developer Scott Rechler’s RXR Realty LLC sued over the failed purchase of a $660 million stake in a Manhattan office tower, saying the owners reneged on the agreement to secure a better deal.

Under an agreement dated May 30, RXR agreed to buy a 48.9 percent membership interest in the owner of Worldwide Plaza, an office and retail building at 825 Eighth Avenue valued at $1.25 billion, according to papers filed today in New York State Supreme Court in Manhattan.

RXR agreed to pay about $660 million, more than its owners paid for the entire office tower in 2009, according to two people who were briefed on the deal.

RXR said New York-based George Comfort & Sons, which leads the partnership that owns the building, “sabotaged the lender approval process in order to coerce a termination of the agreement” and secure superior terms from a new buyer, American Realty Capital Properties Inc. RXR asked for more than $200 million in damages.

George Comfort promised RXR an extension of the closing date, as long as the master servicer agreed to the deal, while having “no intention of honoring its promise to RXR” because it was negotiating an agreement with American Realty Capital, according to the RXR filing.

American Realty was able to make the investment only because it misappropriated information that RXR had provided in confidentiality after it approached the company about a possible joint venture in the investment, RXR said.

49-Story Tower

Worldwide Plaza, a 49-story tower on Eighth Avenue between West 49th and West 50th streets, has 1.8 million square feet (167,000 square meters) of space.

In 2011, Nomura Holdings Inc. agreed to move its offices to Worldwide Plaza from the World Financial Center downtown, filling a large vacancy and increasing the building’s cash flow. Other tenants include the law firm Cravath Swaine & Moore LLP.

For Rechler, the deal would have continued a buying spree that began in 2010, when commercial-property values started climbing again. As of February, RXR had acquired or had deals to buy $4.3 billion of New York real estate, making it the biggest post-recession buyer of Manhattan commercial properties after SL Green Realty Corp., the city’s biggest office-building owner.

The lawsuit was reported earlier today by Crain’s New York Business.

George Comfort and New York-based American Realty Capital didn’t immediately reply to voice-mail message seeking comment on the suit.

The case is RXR WWP Owner LLC v. WWP Sponsor LLC, 653553/2013, New York State Supreme Court, New York County (Manhattan).

To contact the reporters on this story: Chris Dolmetsch in New York State Supreme Court at cdolmetsch@bloomberg.net; David M. Levitt in New York at dlevitt@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net.

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