Jay-Z sues lender over loan for NYC property
By Jonathan Stempel
NEW YORK (Reuters) - Rap music artist, Jay-Z, on Wednesday sued an investment firm and a bank, accusing them of trying to "bleed" $3.7 million from him over a loan to help him build a hotel on Manhattan's west side.
The lawsuit was filed in a Manhattan federal court against Highland Capital Management LP and NexBank SSB, concerning a property located at 511 West 21st Street in Manhattan, which was to be developed into lodging known as the J Hotel.
Highland said in a statement it would defend itself against Jay-Z's "meritless" claims, adding the loan remains in default. A lawyer for Dallas-based NexBank did not return a request for comment. Robert Chan, a lawyer representing Jay-Z, declined to comment.
Jay-Z's given name is Shawn Carter, who is the named plaintiff in the lawsuit. The 40-year-old is one of the world's best-known rap artists and entrepreneurs.
According to the complaint, Jay-Z's company bought the property in August 2007, and obtained a $52-million senior loan that was assigned to Highland and serviced by NexBank, and which the rapper guaranteed. The company also obtained an $11.8 million junior loan.
But a declining real estate market caused the property's value to fall, prompting Jay-Z's company to try to give the land back to Highland instead of going into foreclosure.
The complaint said Highland dragged its heels, causing Jay-Z to rack up interest and carrying costs for which he was personally liable.
It also contended that Highland improperly diverted funds that Jay-Z's company had placed into a reserve to cover potential environmental problems. Continued...