At first glance, the sale of 346 Madison Avenue to SL Green didn’t seem to involve RFR. But Aby Rosen’s firm is seeking damages after allegedly doing significant due diligence on the property, only for that information to apparently facilitate the sale to another party.
RFR filed a lawsuit Monday in New York County Supreme Court, The Promote reported. The company is suing the selling ownership entities, led by Luxottica heir and former Brooks Brothers CEO Claudio Del Vecchio, for unspecified damages.
The saga dates back to before the pandemic, when Del Vecchio started looking to offload the Brooks Brothers store at 346 Madison alongside an adjacent office building at 11 East 44th Street. They were put up for sale in 2021, according to the suit, via JLL.
After struggling to sell the properties, RFR claims to have come on the scene, conducting extensive due diligence on a site mired by difficult zoning and capitalization issues. It allegedly reached an exclusivity and confidentiality agreement with the seller and shared information from its due diligence.
There was even a purchase and sale agreement put in place, according to the lawsuit. But after an exclusivity term expired, the agreement was allegedly “duplicated into the name of another buyer and executed.” RFR didn’t name the buyer, but it likely didn’t have to, as SL Green entered into contract on a $160 million acquisition at the start of this month.
RFR alleges its confidential data was uploaded to a third-party site accessible to competitors, a breach that allowed SL Green to quickly scoop up a deal after RFR’s exclusivity window closed. RFR likened the breach to a “Trojan Horse.”
JLL listing broker David Giancola allegedly used RFR’s interest in the property to “squeeze out value” from the deal, but Giancola is not listed as a defendant in the case.
RFR declined to comment on the lawsuit to The Promote. Del Vecchio could not immediately be reached by The Real Deal.
It’s unclear how the lawsuit may affect SL Green’s plans for a ground-up office development steps away from Grand Central Terminal; the site could house an 800,000-square-foot project. It’s adjacent to 350 Madison Avenue, a 400,000-square-foot property owned by none other than RFR.
— Holden Walter-Warner
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