The Stamford Executive Center at 1111 Summer St. is a handsome glass-clad office building near the center of the city that is home to a number of lawyers and other businesses. It is also at the center of a legal tussle between New York City developers over a ground lease.
1111 Summer Street LLC, the plaintiff in the case and the would-be buyer of the ground lease, is registered at 670 Myrtle Ave. in Brooklyn. The company lists its principal as Abraham Brach, a New York City developer with several multimillion-dollar properties to his name.
If the sale had gone through, Brach’s company would have acquired the remaining 97 years of the grounds lease for the Stamford Executive Center. The agreed-to terms included $600,000 and the assumption of all debts related to the property by Brach’s company.
Brach’s lawsuit for the ownership of the Executive Center’s ground lease was filed with Stamford Judicial district on March 28. It accused the current owners of the lease of one count of breach of contract and another count of breach of good faith.
The complaint mentioned that a third entity, AGW Summer LLC, owns the property, but does not name them as a defendant.
Meanwhile, the current owners of the ground lease, the similarly named 1111 Summer Street Ventures LLC, lists as its principal 1111 Summer Street Investor LLC, which in turn lists an address at 40 W. 57 St. in Manhattan. This address is shared with Joshua Schuster’s Silverback Development, which lists the Stamford Executive Center as one of its current projects.
Silverback Development was founded by its managing principal Josh Schuster. Once hailed as a rising star of real estate in the New York City area by The Real Deal, that same publication more recently reported on allegations from his former business partners who stated that the New York courts ordered Schuster to pay millions of dollars to his creditors. This included more than $300,000 for failing to make payments required by a settlement with investor Steven Fisch to settle an unrepaid loan Schuster received to develop the Stamford Executive Center.
In January 2021, Silverback Developments sold the Stamford Executive Center to AGW Summer for $8.5 million while signing a leaseback. The entire property’s value was appraised at about $21 million. The ground lease signed with AGW Summer grants Schuster’s company a 98-year lease of the Executive Center.
Brach’s company alleged that Schuster’s company signed a sales agreement in Nov. 2021. Instead of closing within five days as stipulated in the agreement, the current owners failed to close and fulfill their obligations. Additionally, the complaint alleged that the current owners directed Korth Direct Mortgage, which granted a mortgage on the ground lease to 1111 Summer Street Ventures, not to cooperate with the buyers in completing the transaction.
During the duration of a ground lease, the tenant is responsible for paying the property taxes and, in return, can mortgage the property and collect rents from those who have more traditional leases on a property. Many investors make use of these options to build on property they do not wish to own outright, and since they do not need to put money down on the property to start making use of it, it is also useful for rapid expansion. In the case of the Stamford Executive Center, it appears that the ground lease was combined with a sale leaseback.
In addition to failing to close the sale, the defendant did not appear in court after the initial summons, prompting the plaintiff’s lawyer, Mark Schnitzler of Schnitzler Law, to file for a default judgment to create a temporary receivership to collect all rents from the ground lease until the matter is closed.
On April 29, Judge Kenneth Provodator ordered that a hearing on the matter be scheduled for a future date.
On both counts, Brach’s company is seeking all interests, benefits and obligations for real property of both buildings, being appointed the receiver of all rents across that entire space. Money damages are put forth as an alternative as well.
At press time, 1111 Summer Street Ventures did not respond to requests for comment and does not have listed representation.
