During all the pomp and circumstance surrounding the opening of the new Setai Fifth Avenue condo/hotel in Midtown, mentions of Manhattan's other Setai, the one on 40 Broad Street in the Financial District, have been nonexistent. That could be because the two Setais have different developers, but here's another reason: Setai, the luxury hotel/spa brand, wants nothing to do with 40 Broad Street anymore, and is suing the condo conversion's developers to uphold its good name.
This is not to be confused with another Setai lawsuit, in which an investor sued developer Zamir Equities over construction cost overruns and the "sham" closing that eventually led to buyers being offered refunds in the building. In this latest complaint, filed in late September, the Setai Group is going after Zamir Equities (a family that made its fortune in diamonds before partnering up on several real estate deals with trouble magnet Kent Swig) for basically churning out a subpar product. One that was priced between $730,000 to $4.95 million per apartment. Apologies to the 50 or so Setai buyers.
In the filing?seen below?the Setai Group spells out in painstaking detail the branding agreement between the parties, which covered a lot more than just licensing fees, and how it was violated. Fast-forward to page 14 of the complaint, to the section headlined "Defendants' Wrongful Acts," to get to the fun stuff. The Setai Group alleges that Zamir went $24 million over the construction budget, defaulted on its loans, didn't pay up, violated the design agreements and used substandard materials (like carpeting and a "substandard lighting package" in the hallways instead of the "approved stone with wood borders and 5-star lighting package). Look, a mistake or two here and there is fine, but do not screw up a 5-star lighting package when the Setai's reputation is on the line.
As for the building itself, there are a few resales on the market, but the project's website is MIA. The Setai Club, a posh members-only operation in the building, is up and running, but members shouldn't be surprised if they wake up one day to find that they're now members of the 40 Broad Club instead. A tipster adds more fuel to the fire: "Developer already lost the property to the bank recently. Setai Club in reneging on promised amenities as of today (the $5000/yr package)." At least the restaurant is tasty?
· The Setai Club & Spa New York [setaiclubnewyork.com]
· The Setai coverage [Curbed]