An affiliate of Larry Gluck’s Stellar Management is suing Raphael Toledano, claiming the investor accepted a $130 million mortgage to finance the acquisition of his East Village portfolio, but then backed out of the deal and refused to pay the $1.9 million break-up fee.
Toledano, a former broker and now the founder of Brookhill Properties, allegedly executed a contract in July with Stellar for a first loan of $110 million, with an initial 24-month term, 9 percent annual interest rate and 6 percent monthly rate, according to Stellar’s lawsuit, filed Tuesday in New York State Supreme Court. Toledano intended to use the loan to finance his $97 million acquisition of a prime East Village portfolio of 301 apartments and 15 retail spaces, which he was buying from the Tabak family.
Stellar and Toledano also agreed to a second $20 million loan for a 24-month term and 20 percent annual interest rate, Stellar claims in the suit. But Toledano allegedly turned around and struck a deal with Madison Realty Capital to finance the acquisition instead.
“Almost immediately after signing the contract on July 15,2015,” Stellar states in the suit, “Toledano opted to take out a $124 million loan from Madison Realty Capital to finance the portfolio purchase. Toledano’s agreement with Madison Realty Capital was in direct violation of the exclusivity provision of the contract and constitutes as a breach of contract.”
As part of the terms of the agreement with Stellar, Toledano was meant to pay a non-refundable $300,000 deposit and a $1.9 million break-up fee, according to the lawsuit. Stellar is asking the court to make Toledano pay the $1.9 million break-up fee as well as another $300,000 in legal costs.
Stellar’s lawyer, Andrew Miltenberg of Nesenoff & Miltenberg, declined to comment, citing pending litigation. Madison is not named as a party in the suit.
The East Village deal was Toledano’s first major purchase since striking out as a real estate investor, and came with its fair share of drama. Two weeks before the deal was set to close, Toledano’s uncle, Rosewood Realty Group’s Aaron Jungreis took legal action against his nephew, claiming that he was squeezed out of the deal. (The suit was later settled.)
In December, an investigation by The Real Deal uncovered a potential link between Toledano and a fake law firm, Truman & Wildes LLP. The investor is also facing allegations of harassment and intimidation from his rent-regulated tenants at 444 East 13th Street.
Source: The Real Deal