CHICAGO-Justice Sallie Manzanet-Daniels of the New York SupremeCourt Appellate Division has approved an injunction blocking theforeclosure sale of 500 W. Monroe, a 46-story office building here.Broadway Partners sought the halt to the sale, planned for Sept.14, by lenders Transwestern Commercial Services and Piedmont OfficeRealty Trust.

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In a motion to request the injunction, Broadway claimed that thelenders conspired to block a loan extension application, causing adefault situation. Manzanet-Daniels has approved the injunctionpending determination of the motion. None of the companies involvedresponded to questions about the case.

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Transwestern is based here, while Piedmont is based in Georgiaand Broadway is based in New York City.

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Broadway bought the building in 2007 by borrowing $340.5million. Morgan Stanley Mortgage Capital Holdings was the mainoriginating lender, but was succeeded by Piedmont.

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The owner avoided default in early 2009 by reaching a debtextension agreement with Transwestern. As part of the agreement,Transwestern took over management of the building. The973,100-square-foot tower includes tenants such as GE Capital, andMarsh & McLennan.

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However, in an Aug. 31 motion, Broadway accuses the two lendersof breaching contract and fraud by “colluding and conspiring” toblock the owner from extending its loan. Specifically, Broadwayclaims Transwestern would not allow formerly-agreed to fees to beapplied to a loan extension until August 2012.

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“Transwestern…refused (to) apply the 2010 Excess Cash Flows topay the extension fees, notwithstanding that the 2010 Excess CashFlows were more than sufficient to cover such fees.Transwestern…refused to negotiate in good faith concerning thepayment of the extension fees,” according to the Broadway’smotion.

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The owner also claims the lenders made a secret agreement toforeclose on the building. “Transwestern entered into a sideagreement with Piedmont under which it would receive some payout orother benefit in order to cooperate with Piedmont’s plan and tofrustrate Broadway’s rights to extend under the forbearanceagreement,” according to the Broadway motion.

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Broadway also says it has the right to terminate Transwestern asproperty manager as of Aug. 17, but the lender is still at thebuilding. “If Transwestern Commercial is permitted to continue toact as exclusive leasing agent and/or managing agent of theproperty after the conclusion of its respective agency periods,Broadway will suffer immediate and irreparable harm in thatTranswestern will continue to own the property, placing the entireproperty at risk,” according to the Broadway motion.

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