by admin

NEW YORK CITY AND BEACHWOOD, OHIO — The war of words has begun between New York City-based investment manager Coventry Real Estate Advisors and Beachwood-based REIT Developers Diversified Realty (DDR). In a press release issued Tuesday, Coventry claims that it has filed a $500 million lawsuit against DDR for fraud, malfeasance, mismanagement, violation of fiduciary and contractual obligations, and self-dealing.

Coventry says the suit is related to 12 real estate projects across the country in which DDR co-invested and agreed to provide management, leasing and development services. In the statement, Coventry says DDR failed to properly manage the properties, misrepresented assets it sold to Coventry and purposefully inflated fees and escalated costs to justify even greater fees, among other things. “The effect of DDR's purposeful actions have made many of the properties commercially untenable,” Coventry's release reads. The company claims that it has since terminated its leasing and management contracts with DDR.

The allegations go even further, claiming DDR “significantly impaired the values of Coventry's investments, while enhancing the value of DDR's stock price, placing itself in a position to acquire at distressed prices some of the same properties DDR recommended that Coventry acquire and which [sic] it promised to manage, lease and develop for Coventry.”

Coventry President and CEO Peter Henkel was quoted in the statement as saying, “After attempting for years to compel DDR to live up to its obligations, it is with great reluctance that we take this step. We have, however, a fiduciary obligation to protect the significant investment of hundreds of millions of dollars made by many institutional investors, including the pension and retirement funds on behalf of their investors.”

However, DDR issued a response claiming it has not been served with a lawsuit, which Coventry claims to have filed in the Supreme Court of the State of New York, and that it has not received any notice of the termination of its agreement with Coventry.

In its release, DDR “vehemently denies the allegations set forth in the press release and will vigorously defend itself against such allegations in any legal proceeding.” It goes on to say that DDR denies that it ever breached any such agreement with Coventry.

— Coleman Wood

You may also like