RFR Contests “Charade” Foreclosure of 285 Madison Avenue

8 minutes read

Aby Rosen is fighting to claw back a prized Midtown office building he lost at a foreclosure auction this spring, claiming in court that the process was “rigged.”

Rosen’s RFR Realty filed suit Friday against Korea-based lender KTB CRE Debt Fund No. 11, aka Daol Asset Management, alleging the April auction of 285 Madison Avenue was a “charade,” Crain’s reported. KTB took the 27-story property for $132 million after RFR failed to repay its loans.

The lawsuit claims the lender sabotaged Rosen’s efforts to retain or refinance the building by mismanaging the auction, cutting off lucrative management fees and imposing what RFR called a “particularly unreasonable” $500,000 deposit requirement to participate.

The Madison Avenue building, developed in 1926 and considered a Class A property by S&P Global following an $80 million renovation, was 86 percent leased in 2017 with tenants like General Electric and PVH. That year, Rosen refinanced its $270 million mortgage and extracted $127 million in cash, while also taking on $120 million in mezzanine debt.

But Rosen was unable to repay when the loans matured in 2022. After a foreclosure filing in December, KTB scheduled the April 15 auction. Rosen made a last-ditch appeal in court that morning, saying he needed more time to find an investor, citing a pending deal with Amazon for a different property. But the judge didn’t bite.

Only KTB and RFR showed up to bid.

Rosen’s lawsuit accuses KTB of failing to market the property properly and interfering with RFR’s business by terminating its management contract, costing the firm $4 million in annual fees. KTB is disputing the claims, noting the sale was advertised widely and that RFR complained about a lack of transparency before even requesting sale materials.

Rosen is seeking unspecified damages. The building, which stands a few blocks from Grand Central, was reappraised at $300 million last summer.

The dispute marks the latest blow to Rosen’s New York portfolio, which has faced mounting distress. RFR was ousted last year from its operating role at the Chrysler Building, and its 285 Madison loss followed a separate foreclosure at 522 Fifth Avenue, just blocks away; Rosen ultimately sold the latter property to Amazon for an undisclosed price.

— Holden Walter-Warner