The litigation over the fate of a prized Midtown office building is getting uglier by the day.
After Aby Rosen’s RFR Realty filed a lawsuit this summer regarding the foreclosure auction of 285 Madison Avenue, buyer Ocean West Capital Partners responded last week, Crain’s reported.
“This litigation is a shakedown,” the firm said in a motion filed to the New York state Supreme Court. Rosen declined to comment to the publication following the motion.
Ocean West is referring to a lawsuit RFR filed in July against Korea-based lender KTB CRE Debt Fund No. 11, aka Daol Asset Management. RFR claimed the April auction of the 27-story property was a “charade” and “rigged.”
The lawsuit claimed the lender sabotaged Rosen’s efforts to retain or refinance the building by mismanaging the auction, cutting off lucrative management fees and imposing what RFR called a “particularly unreasonable” $500,000 deposit requirement to participate.
The Class A Madison Avenue building, developed in 1926, was 86 percent leased in 2017 with tenants like General Electric and PVH. That year, Rosen refinanced a $270 million mortgage and extracted $127 million in cash while taking on $120 million in mezzanine debt.
When the CMBS loan matured in 2022, RFR was granted an 18-month extension. But the firm was unable to pay after the second deadline hit. After a foreclosure filing earlier this year, KTB scheduled an auction for April. Rosen made a last-ditch appeal in court that morning, saying he needed more time to find an investor.
The judge didn’t go for it, though. Only KTB and RFR showed up to bid. KTB took possession of the property for $132 million. The lender then turned around and sold the building to Ocean West.
Rosen’s lawsuit accused KTB of failing to market the property properly and interfering with RFR’s business by terminating its management contract, costing the firm $4 million in annual fees. KTB disputed the claims, noting the sale was advertised widely and that RFR complained about a lack of transparency before even requesting sale materials.
Rosen is seeking unspecified damages. The building, a few blocks from Grand Central and 96 percent leased as of last February, was reappraised at $300 million last summer. Ocean West is planning investments, including a rooftop deck and a gym.
— Holden Walter-Warner
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