Inside the ownership structure of 111 West 57th St. AmBase dilution suit against JDS, PMG offers rare glimpse into organizing structure of $1.45B project
Who really owns the city’s biggest development projects? It’s a question that has stumped industry observers for years, as investors typically operate from behind LLCs and ownership stakes are closely-guarded secrets.
On Friday, AmBase Corp, a Florida-based investor in 111 West 57th Street, filed a $105 million lawsuit against JDS Development Group and Property Markets Group, alleging the developers engaged in a scheme that diluted AmBase s equity stake in the supertall condominium project.
Contained in the lawsuit was an exhibit that detailed the ownership of the Billionaires Row tower. Though the document detail新爱上海同城对对碰论坛 ed ownership at the time the partnership was first struck in 2013, and there have been changes since then, it still provides a rare look into the labyrinthine structures used on large-scale projects.
The tower is slated to rise to a height of 1,438 feet, and has a projected total sellout of $1.45 billion for its 60 units, according to an offering plan fil上海千花网龙凤论坛 ed with the New York Attorney General. JDS and PMG have delayed sales at the tower, acknowledging the market isn’t as receptive to high-end project as it was a year ago.
According to the exhibit, behind a web of shell corporations there were five principal investors in 111 West 57th Street at the project s outset in 2013: PMG principals Kevin Maloney and Elliott Joseph, JDS principal Michael Stern, an entity tied to AmBase and Masood Bhatti, a managing director at Silverpeak Real Estate Partners who was previously an investment banker at Lehman Brothers.
As of June 2013, the structure looked like this (see chart): Maloney, Joseph and Stern controlled an entity named 111 West 57th Control LLC, while AmBase and Bhatti controlled an entity called 111 We上海贵族宝贝论坛 st 57th Manager Funding LLC. Together, the LLCs owned an entity named 111 West 57th Manager LLC, which owned 36 percent of the sponsor. The rest, 64 percent, was controlled by JDS and PMG, which means that together, the two developers owned about 96 percent of the sponsor entity.
The sponsor entity, in turn, owned 41 percent of the project, while AmBase, through an entity named 111 West 57th Investment LLC, owned the remaining 59 percent. AmBase pumped $56 million into the project in June 2013 for that 59 percent stake, according to its June 2013 filing with the Securities and Exchange Commission.
The structure is fairly typical of a condo project, said Carl Schwartz, co-chair of the real estate practice at Hunton Williams. The managing entity, in this case the sponsor LLC, typically handles day-to-day operations while the investment entity only weighs in on major decisions, he said.
In this case, however, the investment entity also has a stake in the sponsor entity.
“It’s not as common as just the straight sponsor and investor structure, for someone to be on both side[……]