Korein family sues Vornado for $30M over Penn Plaza ground lease reset

420 Seventh Avenue (Credit - Google)

420 Seventh Avenue (Credit - Google)

The Korein family’s Omnispective Management Corporation sued Vornado Realty Trust claiming that Vornado submitted documents in Acris that include a “fraudulent assignment” in order to reduce the ground rent in Penn Plaza, Manhattan. The Korein family is asking a judge to annul the Acris filing or award $30 million in damages. The ground rent is scheduled to be reset on June 17, 2023, and the parties are negotiating how valuable the property is.

The Korein family owns the parcel that includes most of the city block bounded by Seventh and Eighth avenues and 33rd and 34th streets, which it leases to Vornado, its tenant. The addresses include 420 Seventh Avenue and 460 Eighth Avenue.

The dispute is over whether a sublease has been terminated or not in 1999.

In a 2022 ground rent case, Vornado sued its landlord Haymes Investment Company in Hudson Yards, alleging the property was less valuable than an arbitration had found.

Court filings represent the position of one party and are not necessarily accurate or complete. Vornado has not yet responded in court.

In this new case, Korein alleges, “Plaintiff is entitled to an order declaring that the Fraudulent Assignment has no force and effect and the Lessor’s Sublease must be disregarded by the appraisers in determining the FMV of the Demised Property, or, in the alternative, awarding Plaintiff damages in an amount to be proven at trial, but believed to be in excess of $30 million. There is a rent reset for June 17, 2023. “In advance of the appraisal proceeding, Defendant hatched a scheme to revive the long-dead Lessor’s Sublease and claim that the Demised Property must be valued as if the Lessor’s Sublease were still in place, which could artificially reduce Defendant’s ground rent obligation by millions of dollars per year. On February 7, 2023, Defendant recorded a “Corrected Memorandum of Assignment of Subleases” (the “Fraudulent Assignment”), purporting to “correct” the Memorandum of Surrender entered into in 1999. A copy of the Fraudulent Assignment is annexed hereto as Exhibit 2. 24. The Fraudulent Assignment, which was “made as of the 21st day of December, 2022, and effective as of December 15, 1999,” stated that, notwithstanding the Memorandum of Surrender, GreenPoint had not, in fact, surrendered and terminated its rights as sublessee in 1999 but had instead assigned those rights to Defendant “as of December 15, 1999… The Bowery Space is part of the Demised Property, and consists of approximately 28,135 square feet of valuable retail frontage along Seventh and Eighth Avenues. (See Ex. 2, at Art. 1).”
The complaint also states that the Vornado recorded document, “is so plainly a sham that even the title company that recorded the document made sure to distance itself, stamping the document: ‘Accommodation recording only; document not reviewed and no insurance provided.’”
Court LINK

Direct link to the property’s ACRIS page and link to DOB NOW portal.

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