Swig, Lehman Square Off Over 45 Broad Financing

Like a mat-bound boxer who, with his last gasp of breath, drags his nemesis down with him, Lehman Brothers Holdings, a vestige of the now defunct investment bank, filed a foreclosure suit on Jan. 22 against the developer Kent Swig and his project at 45 Broad Street. The suit was first reported on The Observer’s real estate blog.

It was at 45 Broad where Mr. Swig and Robert De Niro had been planning to erect a slinky hotshot of a development called Nobu Hotel and Residences, with 62 stories of flashy condos, hotel rooms, retail space, private saki cellars, and as the name would suggest, a Nobu restaurant.

And so began 2009 for a developer who saw his reputation—and in the now notorious ice-bucket incident, his body—hammered the year before.

Mr. Swig, president of Swig Equities, and 45 Broad LLC are named in the suit, along with various organizations that have filed liens against them (and thereby claimed an interest in the property).

The complaint claims that Lehman Brothers sent three letters to Mr. Swig, on April 23, 2008, Sept. 12, 2008, and Jan. 7, 2009, demanding repayment, with nothing to show for it: “45 Broad has defaulted under the terms of the Loan Documents by, inter alia, failing to pay all unpaid principal and interest on the Notes on the stated maturity date of February 28, 2008, when same became due.”

The two mortgages include one made on June 12, 2006, for $37.7 million, and another made on Feb. 26, 2007, for $11.5 million. In the complaint, Lehman asks that a receiver be appointed “to receive and collect the rents and profits of the Mortgaged Premises and take such action as is necessary to preserve the collateral during the pendency of this action with the usual powers or that Lender have possession thereof.”

In a November interview with The Observer, Mr. Swig attributed the slow progress at 45 Broad and at the nearby 25 Broad condo conversion to Lehman’s September collapse. Describing the government’s handling of the Lehman fallout, he said, “It’s like if you take the Los Angeles freeway and you’re in the middle of rush hour, you have one policeman, one judge, and [he] said, ‘I have to check everybody’s ID as you go by.’ The backup will go from Los Angeles to San Diego. Every surface street will be crippled.”

In a statement, Mr. Swig’s spokesperson described the Lehman suit as “a retaliatory measure” taken in response to Mr. Swig and his partners’ filing of a discovery motion against Lehman to explore what they call the fallen bank’s “commercially unreasonable conduct and deliberate delay and obstruction of the development of the 25 Broad Street and 45 Broad Street projects.” The partners expect to “fully prevail.”

drubinstein@observer.com Swig, Lehman Square Off Over 45 Broad Financing