By Kate Cagle.
Seven Santa Monica apartment buildings caught in the middle of a legal battle have been sold to a San Francisco real estate investment company. The sale involved a total of nine apartment complexes managed by Santa Monica’s largest apartment owner, NMS Properties.
The buildings have been at the center of a legal dispute between NMS’s CEO Neil Shekhter and AEW Capital Management over a joint venture agreement. Earlier this month, Judge Suzanne Bruguera found Shekhter misappropriated funds and fabricated and forged documents in an attempt to buy out AEW. The judge threw out the case as well as transferred full ownership of the properties to AEW.
Tuesday, the Los Angeles Superior Court issued a stay on the judge’s order while NMS’s attorneys appeal the judge’s decision.
“NMS and Neil Shekhter are not going away,” Shekhter’s attorney Skip Miller on a call with the Daily Press. “Not until this gets resolved and sorted out the proper way. (Shekhter) built these properties, he owns them, he manages them. These guys are not going to get away with this kind of thing. This is not Wall Street. This is Santa Monica.”
Shekhter estimates the properties are worth half a billion dollars, but his spokesperson confirms they were sold by AEW to Verbena Road Holdings, Lp for $430.5 million.
“The attempt by AEW Capital, a 60-billion dollar Boston-based hedge fund, to immediately seize and sell for below-market prices numerous properties…will be adjudicated fairly and based on all the facts,” spokesman Eric Rose wrote in a statement to the Daily Press.
Shekhter’s attorneys say NMS will continue to manage the properties during the appeals process, despite the sale to Verbena.
Lawyers for AEW confirmed the sale but would not comment on the terms. Verbena did not return our calls asking for comment.
In a countersuit, NMS claims Verbena was involved in an attempt to change management of the buildings through a “hostile takeover.” On Nov. 21st, NMS claims a team of locksmiths, private security guards, and computer technicians stormed the properties and told employees new management would be taking over. During the five-hour ordeal, security guards locked Shekhter out of the buildings. Santa Monica police officers eventually ordered the intruders to leave.
The seven Santa Monica buildings include the Lido, Quonset, Lincoln Walk, San Marco, Rapallo, Lux Broadway as well as the Luxe Washington in Los Angeles and Luxe La Cienega in West Hollywood.
Ever since the takeover attempt, NMS has paid armed security guards to stand outside the buildings. They remain there today.
