11 Greene developers sue Sol Goldman Investments to protect multi-million dollar ground lease

By Adam Pincus

The development team of the high-end luxury Soho rental and retail project at 11 Greene Street, which includes investor Yitzhak Viatcheslav Mirilashvili, filed a suit last week to protect its valuable ground lease from an early termination by Sol Goldman Investments, the property’s landlord.

The developers have invested millions, according to the suit, having paid $18 million for the parcel, added $48 million in equity and borrowed $45 million in a construction loan. The suit says if the developers were to lose the property there would be, “a concomitant loss in value to tenant of approximately $152 million when lost projected revenues are considered.”

The development team includes Arch Companies and Mirilashvili.

The development has 31 rental units as well as ground floor retail, and has an alternate address of 335-341 Canal Street. Yimby reported in March 2021 the exterior was complete of the building designed by architect Gene Kaufman.

Sol Goldman Investments has ground leases with a number of high profile developers including Extell Development and Jeff Sutton’s Wharton Properties.

The suit, filed on behalf of the entity 11 Greene Street LLC, alleges that Sol Goldman Investments would seek to end the ground lease early in 2029 and not in 2055 as the developers claim the current agreements provide.

According to the complaint, “Landlord is alleging a technical default under the lease in an attempt to take back the premises twenty-five years sooner than the natural expiration of the lease term, thereby seizing tenant’s leasehold along with the value of tenant’s improvements.”

The attorney representing the plaintiff, Y. David Scharf of the law firm Morrison Cohen, said in a email that, “The landlord’s early termination claim is not well founded because the early termination was amended to 2055 and tenant is entitled to at least a 30-day period after July 16 to obtain the TCO.”

The possible truncation of the lease is a result of the developers not obtaining a temporary certificate of occupancy by a revised deadline of July 16, 2021, according to the suit and a letter filed by the Goldman ownership, also known as Solil Management. The developers claim in their suit that they are extremely close to obtaining the temporary certificate of occupancy, and furthermore that covid and the landlord have slowed the development process.

The landlord’s attorney said the court should reject the filing. “The court should deny the request for a TRO and/or Yellowstone injunction.”

The parcel has a long history of frustrated development plans. In 1998, Donald Fishoff signed a 49-year lease with the obligation to construct a new building on the parcel. 10 years later in 2009, with nothing built, he filed to place the owner entity into bankruptcy. That filing was closed and he retained control, but then Fishoff filed again to place the property in bankruptcy in 2013 and the following year the lease was transferred.

The current developers obtained the property at a cost of $18 million, according to the complaint, and invested another $48 million in equity, on top of a $45 million construction loan.

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