On Nov. 15, Stephen Ross, chairman of the Related Companies and owner of the Miami Dolphins, strode into Room 238 of the New York State Supreme Court, four minutes after litigation over 3 Columbus Circle was slated to begin. A dozen lawyers waited around a square table in the center of the room, rattling gold watches and eyeing stacks of documents thicker than phone books. A dusty desk and three side-by-side metal filing cabinets sat in the corner next to three large windows dressed in crooked French blinds.
Mr. Ross swept past his opponent, Joe Moinian, the building’s owner and chairman of his own development firm, sitting upright on a front-row bench closer to the entrance. A big knot in Mr. Moinian’s baby-blue silk tie hugged his neck. Mr. Ross sat down on a bench of his own, front and center, and crossed his legs, knees stacked. “Mr. Ross, I haven’t seen you in years,” said Judge Charles Ramos from the other side of the room. His robe hung open below his bow tie. “It’s like an old-folks home.”
The city’s most powerful developer grinned and arched his eyebrows. “Thank you,” Mr. Ross said. A black ribbed sock and black hand-sewn leather loafer with tassels dangled from below the right cuff of his navy pinstriped suit. His plan to take over Mr. Moinian’s building by controlling the debt is unusual for Mr. Ross, but Columbus Circle is his home turf: He keeps a condo and office in the Time Warner Center, which Related co-developed after helping demolish Robert Moses’ Coliseum. Knocking down Mr. Moinian’s building could be the next step in remaking the area.
But at 3 Columbus Circle, Mr. Ross owns only the $250 million mortgage, which collects $70,000 in interest every day. After Mr. Moinian stopped making payments in January, Mr. Ross and his financier, Deutsche Bank (DB) German American Capital Corporation, accelerated the mortgage, demanding full payment and an additional $54 million as a prepayment penalty. It was the first step toward foreclosure and taking the building away from Mr. Moinian, who has already seen his 20 million-square-foot empire shrink during the Great Recession (Barclays Capital seized 475 Fifth Avenue from Mr. Monian and a partner in 2009).
FOR A LOOK AT THE TEMPESTUOUS HISTORY OF COLUMBUS CIRCLE, SEE THE CASTLES AND CLASHES OF COLUMBUS CIRCLE. >>
Mr. Ross appeared on CNBC’s Squawk Box on Sept. 10 to talk about the real estate market and the Dolphins alongside Richard LeFrak. Mr. Ross’ picture floated onscreen above the title “KING OF COLUMBUS CIRCLE.”
“We bought a note on a property that was kind of adjacent to Time Warner Center,” he told the show’s host, Carl Quintanilla, just after noon. “We saw that there was a higher and better use and we bought the note hoping to do something there.” CNBC cut to B-roll of 3 Columbus Circle with the Moinian Group’s “M” logo on the scaffolding in clear view.
When Mr. Moinian bought the building, a homely red-brick tower built in the 1920s at 1775 Broadway for General Motors, for $130 million in 2000, it was mostly full. Newsweek kept offices there until 2009. Before credit dried up, Mr. Moinian began a bold plan to raise the building’s profile, investing $175 million for renovations, including a fresh sheath of glass. He changed the name to 3 Columbus Circle and raised asking rents.
It’s not the ugliest building in the area, but the glass, which catches the reflection of Lord Norman Foster’s Hearst Tower across the street, isn’t fooling anyone. According to media reports, Mr. Ross would like to demolish Mr. Moinian’s tower and replace it with one designed by a famous architect; he is planning to move the city’s first Nordstrom’s to retail space on the lower floors to anchor the tower, and fill the upper floors with 140 condominiums; and the company began shopping for architects in September. Related declined to comment.
“It’s just not something that I think a lender should be saying,” Stephen Meister, Mr. Monian’s lawyer, told The Observer over the phone on Monday. Mr. Ross has stipulated that any new tenant in the building would have to agree to a six-month demolition clause with no provision for reimbursement.
