Wealthy NYC family feuds over $258-million Madison Avenue sale
With their name on a building at Yale and linked to several investment firms and charitable foundations, the Slifkas are the kind of New York family whose members regularly appear in Manhattan and Hamptons party photos.
But lately they’ve also been appearing on opposite sides in court filings.
Last week, Randy Slifka, one of the sons of Halcyon Capital Management founder Alan Slifka and grandson of developer Joseph Slifka, filed a lawsuit in New York state court claiming he and his brother were shortchanged in the 2019 sale of one of Joseph’s buildings, 477 Madison, for about $258 million. They are seeking more than $37 million in damages.
The defendant in the suit is Michael Hecht, an accountant who oversaw trusts both for Randy and his brothers and their 93-year-old aunt, Barbara Slifka. According to Randy’s suit, Hecht allowed Shorenstein, the property manager of the 24-story building at Madison Avenue and 51st Street, to influence the appraisal of the building in a way that benefited Barbara at the expense of her nephews.
Barbara, “who was 89 years old at the time of the sale in 2019 and in declining health, barely understood, if at all, how the money from the sale of 477 Madison was being distributed,” Randy claims.
Hecht declined to comment on the suit, as did his lawyer, Gregory Clarick. A spokesperson for Shorenstein didn’t immediately respond to a request for comment.
But Randy’s focus on Hecht is a shift from previous claims he’s filed against Barbara herself. In September, he won a $16 million arbitration award against Barbara, who he accused of breaching her fiduciary duty in the distributions to him and his brothers from the building’s sale. Barbara, however, defeated Randy’s 2017 lawsuit challenging her authority to sell the building in the first place.
All of the parties are bold-faced names in Northeastern social and cultural circles. Randy, who runs Slifka Asset Management, is a prominent modern art collector, while Barbara, a longtime fashion editor at Harper’s Bazaar, is a board member at the Solomon R. Guggenheim Foundation and the New York City Ballet and was previously one at the Parrish Art Museum in Southampton. Hecht is a trustee at Bennington College, the Trisha Brown Dance Company and the Lucille Lortel Theatre Foundation.
The fight has been brewing since the 2011 death of Alan Slifka but has its roots in the will of his father, whose name graces the Joseph Slifka Center for Jewish Life at Yale University.
According to Randy’s suit, Joseph Slifka, who died in 1992, left the building equally to Alan and Barbara with instructions that their interests similarly pass on to their children. On his death, Alan’s interest was divided among Randy and two other sons, leaving Barbara with the largest stake.
Further complicating matters, Joseph divided 477 Madison between the fee interest — ownership of the property itself — and the leasehold — the rights to its rental income. The fee interest and leasehold were also equally divided between Alan and Barbara, with most going to them personally but with significant percentages also allocated to trusts in their names.
The building opened in the 1950s with the Ford Foundation as its anchor tenant, and it also became the headquarters of Holiday magazine. But 477 Madison fell out of favor in recent years as tenants flocked to more modern buildings.
In 2013, Shorenstein paid $33 million to acquire most of rental-income rights that had belonged to Alan, according to Randy’s suit. But those rights were set to expire in 2039, making it difficult for the property management company to obtain financing for a much-needed overhaul of the property. Meanwhile, the rent roll at 477 Madison decreased further. At the time of its sale, the building was only around half full, Randy claims.
Barbara informed her nephews in April 2017 that she intended to combine the fee interest and leasehold and put the building up for sale. Randy and one of his brothers, Michael, objected and filed a lawsuit claiming she was not authorized to make that decision unilaterally. But a New York state judge ruled in Barbara’s favor.
In Randy’s more recent suit, he claims Hecht allowed Shorenstein access to the appraisal process for the planned sale. Shorenstein allegedly influenced them to reverse initial appraisals that valued the ownership interest more highly than the rental-income interest.
According to Randy, Newmark Group in 2017 issued a draft appraisal valuing the fee interest at $173 million compared to $101 million for the leasehold. But, two years later, just before the building’s sale to RFR Holdings, the allocations were flipped so that the fee interest was valued at $73 million and the leasehold, $112 million, the lawsuit claims. After the sale, Barbara allegedly allocated 40% of the proceeds to the former and 60% to the latter.
Randy claims this advantaged Barbara, who still held her rights to the rental income, and Shorenstein, which more than doubled its 2013 investment, while harming his and his brothers’ positions. The arbitration panel that sided with Randy in September said that the sale was a “tainted process.”
The suit, which alleges Hecht abdicated his responsibility to the trusts created by Joseph Slifka by letting this happen, is seeking $37.6 million in damages, including interest, that would be split between the two trusts.
Meanwhile, RFR, which is owned by Aby Rosen and Michael Fuchs and also counts the Chrysler and Seagram Buildings in its Manhattan portfolio, renovated Joseph’s postwar property to add landscaped terraces, larger windows and tenant amenities including a clubhouse, wellness center and a lobby art program that has featured works by Jeff Koons and Roy Lichtenstein.
--With assistance from Natalie Wong.