The JV, known as Mazal 485 LLC, charges in a complaint filed instate Supreme Court here that SL Green breached material terms ofthe Purchase Agreement and breached its covenant of good faith andfair dealing. "On the surface, SL Green purported to comply withits obligations under the agreement to seek and obtain approval forthe transaction from its lender, a 'formality' that SL Greenrepresented was a non-issue prior to the agreement since the lenderalready 'blessed' the sale," according to the complaint. Accordingto the complaint, "In actuality, as soon as SL Green realized thatthe sale was no longer advantageous, SL Green derailed the deal andstonewalled the approval process until it had an opportunity toterminate the agreement."

As reported by GlobeSt.com this past August, Mazal—the JV formedby locally-based Gilmor USA LLC and Israeli-based video servicescompany Optibase—agreed to acquire 49.5% of the beneficial interestin the 921,000-square-foot office tower, which SL Green bought in2004 along with adjoining 750 Third Ave. for $480 million. The JVwas to pay $20.8 million, along with a loan of approximately $20million, and assume the debt on a $450-million non-recourse loanfrom Wachovia Bank.

In a release at the time, Optibase CEO Tom Wyler said that Mazalwas the outcome of his company's decision to diversify. "We areexcited about this particular transaction being our entry pointinto the fixed-income real estate sector in North America and webelieve our shareholders would benefit from this in the long run,"Wyler said in August.