Times Square JV Wins Specific Performance of Sale of Parcel Under Times Square Crowne Plaza Hotel for $121 Million
May 3, 2022
Cleary Gottlieb represented the plaintiff, Times Square JV LLC (Times Square JV), in securing the acquisition of a parcel under the Times Square Crowne Plaza building for $121 million, which closed on May 3, 2022.
Times Square JV, which already owned the other parcels under the building, had leased the disputed parcel for decades and in September 2021, exercised its right of first refusal pursuant to the lease to purchase the disputed parcel. The former owner of the disputed parcel, Walber Broadway LLC (Walber), refused to honor Times Square JV’s exercise of its right of first refusal and instead sold the parcel to an affiliate of SL Green Realty Corp. (SL Green). Cleary filed suit on behalf of Times Square JV in September 2021, seeking an order of specific performance directing the sale of the disputed parcel to Times Square JV.
In order to facilitate the prompt resolution of the case, which has prevented the Crowne Plaza Hotel from reopening (having remained closed since the beginning of the COVID-19 pandemic), Times Square JV moved for summary judgment prior to discovery. Walber and SL Green raised numerous defenses to Times Square JV’s specific performance claim, including allegations that the right of first refusal was not validly exercised because Times Square JV had defaulted on its other obligations under the lease. The defendants also challenged the validity of the mezzanine lender’s exercise of voting rights in Times Square JV, through which the independent members of Times Square JV were removed and a sole independent director was appointed prior to such director exercising Times Square JV’s right of first refusal.
At the March 30, 2022, oral argument on the motion for summary judgment, Justice Jennifer G. Schecter of the Commercial Division, New York Supreme Court, rejected the defendants’ arguments and held that the exercise of the right of first refusal was valid. At the close of oral argument, Justice Schecter accordingly awarded specific performance to Times Square JV.
Following this ruling, the parties agreed to a settlement of all claims in the lawsuit and SL Green agreed to sell the disputed parcel to Times Square JV. That sale closed on May 3, 2022, following which Times Square JV now owns the entire Times Square Crowne Plaza building.
In parallel, Cleary also successfully secured the dismissal of all claims asserted against Times Square JV in a related lawsuit brought by the owner of a neighboring building that is leased to Times Square JV. In that case, the court agreed that the claims asserted against Times Square JV for breach of the lease were barred by a non-recourse provision in the lease. The court also dismissed all claims against Times Square JV’s mortgage and mezzanine lenders.
Cleary has also represented Times Square JV’s mortgage and mezzanine lenders since their respective purchases of the mortgage and mezzanine loans in late 2020 and early 2021. The firm advised the mezzanine lender with respect to its exercise of voting rights in Times Square JV to remove the independent members and appoint a sole director, which the court found were valid acts under Delaware law and Times Square JV’s governing documents.