Fairstead co-founder alleges firm seeks to terminate $10M-plus in equity following departure

A co-founder of the national affordable and workforce housing firm Fairstead, William Blodgett, alleges in a suit filed this week that the principals of the firm are seeking to terminate his stake in the company’s assets, a stake he values in the tens of millions of dollars, after Blodgett and the principals began discussions last year related to his leaving the company and starting his own, new affordable and workforce housing venture, Tredway. LINK

Then, according to the complaint, a principal at the firm notified Blodgett in September 2021 that he would be stripped of his equity in Fairstead and related companies. Blodgett helped build since the firm it was launched in 2013. The complaint alleges that prior to the termination, Blodgett and Fairstead were open and on good terms about his leaving, and the notification of the termination of his equity was a surprise, the complaint says. The complaint alleges the principals at Fairstead sought a 35 percent stake in the new venture. The complaint states it is seeking to enforce an arbitration agreement, and that the Fairstead principals are dragging their feet.

Court filings are the positions of one party are not necessarily accurate or complete. Fairstead has not yet filed response papers.

PincusCo’s database, which is not complete, shows that Fairstead owned at least 89 commercial properties with 3.9 million square feet, 3,730 residential units. The portfolio has at least $371.3 million in debt provided in the past three years, with the top three lenders as Berkshire Residential Investments, Greystone & Co., and Capital One respectively. Within the portfolio, the bulk, or 66 percent of the 3,935,034 square feet of built space are elevator properties, with walkup properties next occupying 20 percent of the space. The bulk, or 58 percent of the built space, is in Bronx, with Manhattan next at 23 percent of the space. One of the properties is

Blodgett launched Tredway after leaving Fairstead in November 2021, and in May 2022 filed for arbitration to retain the equity stake in Fairstead entities, after he said he attempted to resolve the matter without litigation.

The Commercial Observer reported on Blodgett’s new venture in a profile in December 2021. Blodgett claims Fairstead is seeking to terminate “tens of millions of dollars” of equity interest Blodgett claims to own, due to “a false claim that Blodgett breached his employment agreement.” The papers say Stuart Feldman on September 21, 2021, gave Blodgett a termination letter that sought to cancel Blodgett’s equity stakes. “Fortitude does not dispute that it is obligated to arbitrate Blodgett’s claims, yet Fortitude has refused to pay the nominal fee required to initiate the arbitration and, since filing its Answer in arbitration, has refused to participate in the arbitration. ” The suit does not give a specific amount being sought, but values the potential loss in the tens of millions of dollars. LINK