SL Green Realty Corp has become the second real estate firm to file a lawsuit against the Dubai based GEMS global educational group over a failed new school project slated for Manhattan’s Upper East Side.
The suit revolves around a planned 213, 000 square foot school which was to be located at 1802-1810 Second Avenue and 303-305 East 93rd Street. SL Green maintains that under an agreement with GEMS it was supposed to have the right of first refusal to take part in the project, but instead Merchants Hospitality was chosen as the developer.
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SL Green is seeking $500, 000 in damages, which it says their original contract promised them if they were left out of the final deal for the development.
A lawyer for GEMS, however, told The Real Deal that the firm did in fact give SL Green the proper notice.
But Merchant’s Hospitality also had problems with GEMS and in June Abraham Merchant’s firm filed a $941 million lawsuit against the Dubai company. Merchant claims that GEMS used false pretenses to back out of their deal and that the education company never even had the necessary funds to finance its part of the project. The money sought is what Merchant says it would have earned over a 40 year lease that the firm had for the project.
After a summary judgment order for the amount was refused by a New York court, Merchant filed a second suit in July for $200 million on different grounds.
GEMS counter sued claiming that Merchant did not perform the work it was required to under their agreement and that it also made false claims to GEMS.
In other SL Green news, in spite of its legal problems last month the company was given a “buy” rating by ten different financial firms.