Soloviev Group, A&E Real Estate trade blame as $120M Yorkville rental sale fails

Stefan Soloviev’s Soloviev Group and Douglas Eisenberg’s A&E Real Estate Holdings each suggest the other is to blame after a $120 million deal for control of a 23-story Yorkville rental apartment at 501 East 87th Street fell through, according to a lawsuit Soloviev Group filed yesterday in New York State Supreme Court. Court filings indicate that the discovery of asbestos at the property threw a wrench into the deal. The contract includes a provision that if the lender does not approve, then the buyer can get the deposit back. The suit is Soloviev’s effort to retain the deposit, and A&E documents indicate it seeks the return of the deposits.

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The Soloviev Group alleges it signed a contract February 17, 2023, as seller with A&E Real Estate Holdings as buyer in which A&E would buy a 56.3% interest in the 179-unit high-end rental building at 501 East 87th Street in Yorkville and simultaneously form a new company, with the real estate valued at $120 million.

A&E would own a 56.3% share through a $33.5 million payment, while Soloviev Group would own a 43.7% share of the new company, through its existing equity valued at $26 million.

They would each be responsible for their proportionate share of the existing $60.5 million mortgage.

The original closing date was April 18, 2023, and the outside closing date was October 2, 2023. The closing was extended several times. A&E has paid $13 million in deposits and $1.5 million in extension fees. Of that, $7.5 million has been released with $7 million remaining in escrow. Soloviev Group is alleging it is owed as liquidated damages that remaining $7 million. A&E is seeking the return of all its deposits.

A&E alleges, according to court records filed by Soloviev,  that the lender required A&E to remediate the asbestos as a condition of assuming the loan, which A&E rejected. Because of that, it sought to terminate the contract.

in order to close and for that reason sought to terminate the contract. Steven Weymouth, the CFO for Soloviev Group, signed the complaint. The Soloviev Group is the industrial and real estate conglomerate headed by Stefan Soloviev, https://solovievgroup.com/who-we-are/leadership which now includes the holdings of his late father, Sheldon Solow. Soloviev has sold several buildings in the portfolio over the last few years. Steven Weymouth, CFO of Solow Realty & Development, signed for the plaintiff.

The property

The elevator building with 179 residential units in Yorkville has 202,322 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 151 feet and is 125 feet deep with a total lot size of 16,363 square feet. The lot is irregular. The zoning is R10 which allows for up to 10 times floor area ratio (FAR) for residential with inclusionary housing. The city-designated market value for the property in 2022 is $42.1 million. The most recent loan totaled $60.5 million and was provided by Walker & Dunlop on August 31, 2020.

Prior sales and revenue

The 202,322-square-foot property generated revenue of $9.1 million or $45 per square foot, according to the most recent income and expense figures.

The neighborhood

In Yorkville, The majority, or 61 percent of the 26.6 million square feet of commercial built space are elevator buildings, with walkup buildings next occupying 28 percent of the space. In sales, Yorkville has near average sales volume among other neighborhoods with $783.6 million in sales volume in the last two years and is the 18th highest in Manhattan. For development, Yorkville has near average amount of major developments among other neighborhoods and is the 34th highest in Manhattan. It had 387,162 square feet of commercial and multi-family construction under development in the last two years, which represents 1 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of nine of the 22 commercial properties representing 333,643 square feet of the 459,863 square feet. The largest owner is Burt Cohen, followed by Ditmas Management Corp. and then HUBB NYC. There are no active new building construction projects on this tax block.

The owner

The PincusCo database currently indicates that Soloviev Group’s Solow Realty & Development owned at least three commercial properties with 179 residential units in New York City with 1,900,581 square feet and a city-determined market value of $1.1 billion. (Market value is typically about 50% of actual value.) The portfolio has $60.5 million in debt, borrowed from Walker & Dunlop. Within the portfolio, the bulk, or 89 percent of the 1,900,581 square feet of built space are office properties, with elevator properties next occupying 11 percent of the space. They are all located in Manhattan.

The owners according to the Department of Housing Preservation and Development includes Anthony Calicchio, head officer and Miguel Acosta, site manager. The business entity is 87th St. Realty Company II, LLC.

The surrounding

Within a 400-foot radius of 503 East 87 Street, PincusCo identified three commercial real estate items of interests occurred over the past 24 months. One of those three items was a sale which 431 E. 87 LLC bought the 11,220-square-foot, 17-unit rental (D3) on 431 East 87th Street for $11.2 million from 431 East 87th Street LLC on July 14, 2022. Of those three items, two were loans above $5 million totaling $19.6 million. The most recent of the two was Mitchell Soodak in which borrowed $5 million from Carver Federal Savings Bank secured by the 11,383-square-foot, 10-unit rental (C7) on 1657 York Avenue and two other properties on March 29, 2022.

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