CW Capital Management, an affiliate of Alexander Shing’s
LA-based Cottonwood Group, is suing a Chinese developer and New York based
brokerage for reneging on a $205 million loan deal for a luxury New Jersey
Beijing headquartered Hongkun USA has already started building 1800 Avenue at Port Imperial (rendering top) a 280-unit complex of luxury condos hugging the Hudson River in Weehawken.
However, CW said it spent time and money setting up senior
loan financing that would position the $3.2 billion Cottonwood as the main
investor on the project before Hongkun went behind its back and tapped Tribeca
Realty Capital (TRC) in New York to look for another lead investor.
According to CW’s complaint, CW had exclusivity on the loan
after Hongkun signed a term sheet last year, but the deal crumbled when it got
wind of the loan being pitched to other lenders by Tribeca Realty Capital.
Hongkun has countersued, claiming CW was dragging its heels
on the lending process and has demanded its $200,000 deposit back.
TRC filed a motion to be dismissed from the suit, but on
Wednesday, Justice Barry R. Ostrager of the New York County Supreme Court,
denied that motion and ordered the case to proceed. In court papers, TRC said
it was retained by HongKun to secure financing for the Weehawken project when
CW failed to make any progress. The
Manhattan firm said it was never made aware CW had already been retained as an
exclusive financial advisor.
“HK asked us to secure financing on an expedited basis because others were not making meaningful progress. We had no prior knowledge of HK’s agreement with others and never even heard of CW Capital Management LLC,” said Tribeca in court documents.
Frank S. DiCarlo, Special Counsel at Kasowitz Benson Torres
LLP, which represents CW in the matter, stated: “We are pleased with Judge
Ostrager’s well-reasoned decision and look forward to proceeding with discovery
and proving our case in court.”
Hongkun is among a slew of Asian developers who have been
pushing into the US condo market in recent years. The so-called Gold Coast
along the Hudson River has been fertile ground for firms including DMG, China
Overseas America and Landsea Holdings, who see upside in the formerly
industrial waterfront that stretches nine miles from Bayonne to Fort Lee that
has been transformed by trendy residential developments, restaurants and shops
catering a millennial workforce looking for a cheaper alternative to Manhattan.
The Port Imperial community where Hongkun is building its new 1800 Avenue that CW had planned to finance, is among the biggest. The $3-billion mixed-use, master-planned waterfront project stretches two-and-a-half miles and includes two Marriott-branded hotels planned for completion by the end of 2017.
Roseland Residential Trust is the lead developer of the 200-acre Port Imperial and is currently developing two of its own luxury residential projects set to open in early 2021 — RiverHouse 9, a 313-unit building in Weehawken, and The Capstone, a 360-unit building in West New York. Earlier this year, Roseland acquired 100 percent interest in land holdings in five other Port Imperial waterfront parcels with development potential for roughly 900 apartment homes and 300,000 s/f of office space.
Hongkun USA paid nearly $75 million to acquire two sites within Port Imperial to build 1800 Avenue and, in nearby Edgewater, the company was reportedly partnering with controversial local developer, Fred Daibes, on a 2,000-unit apartment development spread across four high-rise towers at 115 River Road. According to a spokesman for the Town of Edgewater, no official plans have been filed for that site.
Cottonwood is a multi-billion-dollar asset manager whose
portfolio includes EchelonSeaport, the largest residential development
currently underway in Boston. It is part of a luxury lifestyle brand that
includes the 40-story EchelonNomad condo at 316 Fifth Avenue in Manhattan. The
company has also partnered with Korea’s Hana Alternative Asset Management to
pursue other real estate investment and lending opportunities in primary
markets such as Boston, New York, Los Angeles, San Francisco, Houston and
In an emailed statement, Tribeca Realty Capital said,
“Tribeca has never had any agreements with CW whatsoever. We are curious as to
why a real estate developer (CW has a development project in Boston) is acting
as a mortgage broker and suing us and Hongkun. I believe Hongkun is
countersuing for an upfront payment made to CW and they did not perform their
duties under the agreement.”
Hongkun USA did not respond to an emailed request for comment.
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