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Sandro Rosell
FC Barcelona President
Saturday, October 21, 2017

A family feud has ensued as a result of the super sale of Brooklyn’s massive Starrett City.

The late real estate mogul Disque Deane’s children are among the limited partners of the giant multifamily complex, who have filed a lawsuit against the complex’s other managing partners and their stepmother Carol Deane’s company. The suit claims that in early September, when the complex was sold to Rockpoint Group and Brooksville Company for below the market value in an $850 million contract.

According to The Real Deal, “One of the plaintiffs, Starrett City Affordable (SCA), whose investors include San Francisco-based Belveron Partners and Maine-based LIHC Investment Group, claims in court papers to have made a $900 million bid for complex this summer, only to have it ignored by the managing partners. The limited partners together own a 15.4 percent stake in the buildings, now known as Spring Creek Towers. Carol Deane has controlled the managing partners since the death of her husband in 2010.

In their 31-page complaint, plaintiffs allege they were notified by the managing partners in July that Doug Harmon of Cushman and Wakefield had been retained to help ‘recapitalize’ the project. According to them, nothing was mentioned about a planned sale. SCA made offers to buy the complex outright as recently as August, before the sale was announced, and the plaintiffs describe being ‘doubly shocked’ upon learning of the eventual sale amount, $850 million, to Rockpoint and Brooksville.”

Harmon is described in the complaint as being “conflicted” because of his work in 2015 with Brooksville principal Andrew McArthur on the sale of Stuyvesant Town.

The plaintiffs allege that SCA made another offer to purchase the complex for more than Brooksville and Rockpoint’s offer, after news of the Starrett City deal was revealed by the New York Times. However, the bid was allegedly dismissed by the managing partners “speculative” and too “late-stage,” and they questioned the ability of SCA to close. 

On Thursday, September 28, after a hearing on the matter, plaintiff SCA’s spokesperson told The Real Deal that there’s “evidence that both sides of this proposed deal colluded to mislead their investors and to keep the sale out of the public eye.”

TRD reports, “While President Trump is not a plaintiff in the case, he is a limited partner and was expected to pocket about $14 million if the deal goes through. Other Trump family members also own small shares in the property, which has more than 250 investors. A source familiar with the Trump Organization’s business operations told TRD last week that neither Trump nor his trust had any involvement in the deal. The Deane children and their partners are asking State Supreme Court Judge Saliann Scarpulla to void the sale of Starrett City and award damages and attorneys’ fees. At the hearing, however, Judge Scarpulla denied an initial request for a temporary restraining order against the defendants that would block the sale and the dispute is ongoing.”

By Charles Bernstein