Two sides battling it out over distributions on the ultra luxury condo tower
From left: Harry Macklowe, CIM Group’s Richard Ressler and 432 Park Avenue (Getty, CIM Group, Emily Assiran)
August 15th, 2023, by Keith Larsen
CIM Group is advancing in its battle with Harry Macklowe.
The firm initiated a Uniform Commercial Code foreclosure against Macklowe’s interests in three condos at the swanky 432 Park Avenue.
The two sides have been engaged in heated litigation as Macklowe alleges Los Angeles-based CIM swindled him out of $110 million in distributions he claims he was owed for developing the ultra-luxury condo tower. Meanwhile, CIM alleges Macklowe is living lavishly while defaulting on $46 million in loans it provided on three units in the building.
CIM Group tapped Northgate Real Estate Group’s president Greg Corbin and Felix Ades to market the interests in the units, which make up the entire 78th floor and also include an accessory unit on the 28th floor.
The auction is set for Oct. 11, according to marketing materials. Matthew Mannion of Mannion Auctions is the auctioneer.
Macklowe and CIM did not return a request for comment. Macklowe previously claimed CIM has profited approximately $900 million at the project, where three sponsor units of the original 125 are listed for sale.
The foreclosure is a sign that CIM Group is moving aggressively to cure Macklowe’s alleged default. If CIM succeeds, it would also be a symbolic blow to Macklowe. The developer’s name and comeback story is closely related to the 1,400-foot-tall ultra luxury tower that is a key piece of Billionaire’s Row and one of the tallest buildings in the world.
Macklowe bought the site for 432 Park Avenue, then the Drake Hotel for $413 million in 2006. But he soon ran into trouble with property debt during the financial crisis and in 2010 CIM Group swooped in and paid off his debts in the property. Macklowe then sold his interests to CIM Group, which agreed to pay the developer a promote, or a fee, on future sales.
As part of the deal, Macklowe was entitled to 20 percent of the profits once CIM received its initial investment as well as a 15 percent return. After CIM got a 20 percent return, Macklowe’s compensation increased to 50 percent of the profits.
But things didn’t go as planned. In May of 2022, Macklowe acquired three units in the buildings. He claims he planned to pay for the units using proceeds owed to him by CIM, but maintains he did not receive any payments. Instead, CIM lent him more than $46 million to acquire the units.
CIM alleges Macklowe defaulted on those loans.
Macklowe then sent CIM a notice of arbitration alleging that a 2011 amended agreement required them to settle out of court. But CIM claimed that agreement does not apply to Macklowe’s loans. The lawsuit remains pending.