Watermark sues former Sunset Park dev site owner for $10M

Watermark Capital Group through the entity 62-08 Realty LLC, sued the former owner of a large development parcel at 6128 8th Avenue in Sunset Park, Brooklyn, who remained in control under a master lease, because a neighbor had not been included in a construction license and access agreement the developers need to move ahead. The plaintiffs are seeking $10 million or more if they can’t get the required approvals, but what they really want is for the former owner to perform according to their agreements, the complaint says, not any monetary compensation. The plaintiffs filed the case June 11, 2024 in New York State Supreme Court in Manhattan.

This parcel has been subject to complex litigation for years among the various owners. Watermark submitted a new building construction project for a 497-unit, 652,445-square-foot residential (R-2) building at 6128 8th Avenue. The plan was filed on June 13, 2022. It calls for the construction of a 325-foot tall, 28-story building and was filed with the New York City Department of Buildings under job number B00754062. The architect is ND Architecture & Design PC. (The current plan is much larger than the original plan as filed in 2022.)

Case 652924/2024 LINK

Court filings represent the position of one party and are not necessarily accurate or complete.

Watermark Capital Group alleges the former owner of the property, Andrew Kohen, who is not mentioned by name in the complaint, has not performed as required under a March 14, 2024, 85-page settlement agreement, in that he did not obtain consent from a tenant, Maimonides Medical Center, which was needed for Watermark to commence construction. Maimonides Medical Center owns a parcel at 6300 8th Avenue just to the south of the development site and leases two other large buildings from Kohen.

Kohen sold the property for $51.5 million to a group including Ai Yun Chen, which signed a master lease with Kohen for the property. Watermark and former partner Maguire Capital Group acquired control of the site by January 10, 2023, when the joint venture obtained a $45.3 million loan from Signature Bank. Maguire is no longer involved in the project.

The parties entered arbitration and executed settlement agreement, under which Watermark paid $2 million and agreed to pay an additional $14.75 million by the closing which was to be 90 days after the agreement date, though Watermark can extend another 45 days if it pays $5 million of the $14.75 million.

In addition, the defendant would extinguish all leases and claims. Defendant was also given an easement for the neighboring parcel.

According to the complaint, “In general terms, the Settlement Agreement removes the onerous – and frankly, impossible – terms and conditions of the Development Agreement, thereby providing a pathway for Plaintiffs to develop the Property – in exchange for certain payments and other good and valuable consideration to the Defendants… Upon closing, Defendants are to terminate the Development Agreement, the Master Lease, the Supplemental Lease, the Parking Declarations, and any other agreement, declaration, or covenant – to which Defendants are a party – that encumber the Property…

“In order to build on the Property, and obtain financing, Plaintiffs need a CLAA [construction license and access agreement] from the parties interested in the 745 Property [745 64th Street] and RMDS Property [701 64th Street] [which are owned by Kohen but leased to Maimonides Hospital]… entities affiliated with Maimonides Hospital (“Maimonides”) interjected themselves, demanding to be included in any negotiations of a CLAA.

“To be clear, Plaintiffs do not desire for the Settlement Agreement to be declared null and void and for this to be an action for monetary damages. Instead, Plaintiffs want the benefit they bargained for: i.e., the right to develop the Property without interference from their neighbors… As a direct and proximate result of Defendants’ breaches of contract, Plaintiffs have suffered damages in an amount to be determined at trial but no less than $2 million, which was paid at the time of execution of the Settlement Agreement, plus all costs and expenses, and potential profits lost as a result of Plaintiffs’ inability to develop and construct the Property, believed to be well in excess of $10 million.”

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