New York real estate hath no fury like a partner scorned.
Harry Macklowe and his 432 Park Avenue co-developer, CIM Group, are locked in a partners’ quarrel over the Billionaires’ Row condo tower — and are lobbing some catty accusations at each other.
Macklowe has accused Los Angeles-based CIM of “decid[ing] to swindle” him out of $110 million in distributions he says he’s owed for developing the uber-luxury building, where units routinely sell for tens of millions of dollars.
CIM, on the other hand, has called out the 86-year-old Macklowe’s “lavish lifestyle” and “grandiose behavior” as it looks to foreclose on more than $46 million in loans it provided the developer to buy three units in the building.
The dispute hinges on a purchase price agreement both sides worked out in 2011.
Macklowe bought the development site that would become 432 Park Avenue — the former Drake Hotel — for $413 million in 2006. But the developer ran into trouble during the financial crisis, and in 2010 CIM Group bailed him out and paid off his debts at the project.
In return, Macklowe sold his interests to CIM, which agreed to pay the developer a promote from future condo sales.
Under the terms of their amended agreement a year later, Macklowe was entitled to 20 percent of the profits once CIM got its initial investment back plus a 15 percent return. After CIM hit a 20 percent return, Macklowe’s compensation would jump to 50 percent of the profits.
Fast forward a decade to May of last year, and Macklowe bought three apartments in the building, which he claims he planned to pay for using the proceeds owed to him by CIM. But he says he received no payments. Instead, CIM agreed to lend him more than $46 million to buy the units.
CIM claims Macklowe defaulted on the loans a few months later.
That’s when Macklowe sent his partner a notice of arbitration — arguing that the 2011 amended agreement required them to settle out of court. CIM disagreed, saying that the arbitration provision doesn’t apply to the loans.
On Thursday, CIM filed a lawsuit in Manhattan Supreme Court asking a judge to stay the arbitration.
Representatives for Macklowe and CIM Group did not immediately respond to requests for comment.
In its legal filings, CIM depicts Macklowe as a deep-pocketed, flashy swashbuckler who simply chose not to repay his debts.
“Despite Macklowe’s great resources — and his recent high-profile expenditures on such things as a 24-by-42 foot photo installation of himself and his new wife on the side of 432 Park Avenue and his reported plan to purchase waterfront property in Miami that could total more than $58 million — he and his related entities have refused to pay the outstanding obligations on their loans, resulting in an event of default,” CIM’s lawyers wrote.
Macklowe claims CIM has turned an approximately $900 million profit at the project.
“The development is a success, and yet in over 13 years, Macklowe has not received any participation under the amended [agreement],” his attorneys wrote. They claim CIM is trying to get $107 million from Macklowe, including $47 million in interest on a $15 million advance.
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“CIM had previously told Macklowe not to worry about the interest on the advance, and now they demand repayment of an outrageous sum,” Macklowe’s lawyers wrote.
It’s the latest example of drama at the condo tower, where residents in 2021 filed a $250 million lawsuit against the developers over claims of flooding, broken elevators and noise from the 96-story building swaying back and forth.