Frankfurt, Germany-based investment fund Deka Immobilien Investment GmbH is reportedly suing New York-based real estate developer Ashkenazy Acquisition Corp. alleging the latter failed to close on its $174 million acquisition of the the New York Marriott East Side hotel.
The firms acquired the 655-room hotel for $270 million in May 2015, splitting the stakes 85/15 in favor of Deka. A lawsuit filed in state Supreme Court claimed Ashkenazy agreed to acquire Deka’s shares for $174 million in March, paid a $2 million deposit—and then reversed course.
According to the suit, Ashkenazy first pushed the closing back to late June, mid-July and then late-July before the firm’s lawyers told Deka’s representatives the New York company would not be able to afford the purchase. (According to Crains, a source claimed Deka terminated the deal early.)
Ashkenazy is now not only passing on the acquisition, but is trying to take the deposit back. The Deka suit seeks to force Chicago Title Insurance Co., a defendant in the suit and the agent that controls the escrow account that holds Ashkenazy’s deposit, to release the funds to Deka rather than returning them to Ashkenazy.
Since acquiring the hotel, the partners have tried to sell it several times, most recently last May. They have not been able to find a buyer, which could be credited to the influx of branded development in the midtown area.