Blackstone contro Rcs

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
BLACKSTONE REAL ESTATE ADVISORS
L.P.,
BLACKSTONE REAL ESTATE PARTNERS
EUROPE IV-NQ L.P.,
BLACKSTONE REAL ESTATE HOLDINGS
EUROPE IV-NQ ESC L.P.,
BLACKSTONE FAMILY REAL ESTATE
PARTNERSHIP EUROPE IV SMD L.P.,
(OFFSHORE) VII-NQ L.P.,
(OFFSHORE) VII.F-NQ L.P.,
(OFFSHORE) VII.TE.1-8-NQ L.P.,
PARTNERSHIP (OFFSHORE) VII-SMD L.P.,
(OFFSHORE) VII-NQ-ESC L.P.,
EUROPE IV.F-NQ L.P.,
EUROPE IV.2-NQ L.P.,
SFORZA HOLDCO S.À.R.L., and
KRYALOS SGR S.P.A, in its capacity as
management company of DELPHINE FUND,
Plaintiffs,
- against -
RCS MEDIA GROUP S.P.A.,
Defendant.
INDEX NO.: _________________
DATE PURCHASED: 11/20/2018
SUMMONS
TO THE ABOVE-NAMED DEFENDANT:
YOU ARE HEREBY SUMMONED to answer the Complaint in this action and to serve
a copy of your Answer on Plaintiffs’ attorneys within twenty (20) days after the service of this
FILED: NEW YORK COUNTY CLERK 11/20/2018 09:46 AM INDEX NO. 655790/2018
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 11/20/2018
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Summons, exclusive of the date of service (or within thirty (30) days after the service is complete
if this Summons is not personally delivered to you within the State of New York); and in case of
your failure to appear or answer, judgment will be taken against you by default for the relief
demanded therein.
New York County is designated as the place of trial pursuant to CPLR § 503.
Dated: November 20, 2018
New York, New York
TO:
RCS MEDIA GROUP S.P.A.
Via Angelo Rizzoli 8
20132 Milano, Italy
Respectfully submitted,
_____/s/ Aaron H. Marks_________
Aaron H. Marks, P.C.
Matthew Solum, P.C.
Mark B. Salomon
Alexander Talel
KIRKLAND & ELLIS LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: aaron.marks@kirkland.com
matthew.solum@kirkland.com
mark.salomon@kirkland.com
alex.talel@kirkland.com
Counsel to Plaintiffs Blackstone Real Estate
Advisors L.P., Blackstone Real Estate Partners
Europe IV-NQ L.P., Blackstone Real Estate
Holdings Europe IV-NQ ESC L.P., Blackstone
Family Real Estate Partnership Europe IV
SMD L.P., Blackstone Real Estate Partners
(Offshore) VII-NQ L.P., Blackstone Real Estate
Partners (Offshore) VII.F-NQ L.P., Blackstone
Real Estate Partners (Offshore) VII.TE.1-8-NQ
L.P., Blackstone Family Real Estate
Partnership (Offshore) VII-SMD L.P.,
Blackstone Real Estate Holdings (Offshore)
VII-NQ-ESC L.P., Blackstone Real Estate
Holdings (Offshore) VII-NQ L.P., Blackstone
Real Estate Partners Europe IV.F-NQ L.P.,
Blackstone Real Estate Partners Europe IV.2-
NQ L.P., Sforza Holdco S.à.r.l., and Kryalos
SGR S.p.A, in its capacity as management
company of Delphine Fund
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
BLACKSTONE REAL ESTATE ADVISORS
L.P.,
EUROPE IV-NQ L.P.,
EUROPE IV-NQ ESC L.P.,
PARTNERSHIP EUROPE IV SMD L.P.,
(OFFSHORE) VII.F-NQ L.P.,
(OFFSHORE) VII.TE.1-8-NQ L.P.,
PARTNERSHIP (OFFSHORE) VII-SMD L.P.,
(OFFSHORE) VII-NQ-ESC L.P.,
EUROPE IV.F-NQ L.P.,
EUROPE IV.2-NQ L.P.,
SFORZA HOLDCO S.À.R.L., and
KRYALOS SGR S.P.A, in its capacity as
management company of DELPHINE FUND,
Plaintiffs,
- against -
RCS MEDIA GROUP S.P.A.,
Defendant.
INDEX NO.: _________________
COMPLAINT
Plaintiffs Blackstone Real Estate Advisors L.P. (“Blackstone”), Blackstone Real Estate
Partners Europe IV-NQ L.P., Blackstone Real Estate Holdings Europe IV-NQ ESC L.P.,
Blackstone Family Real Estate Partnership Europe IV SMD L.P., Blackstone Real Estate Partners
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(Offshore) VII-NQ L.P., Blackstone Real Estate Partners (Offshore) VII.F-NQ L.P., Blackstone
Real Estate Partners (Offshore) VII.TE.1-8-NQ L.P., Blackstone Family Real Estate Partnership
(Offshore) VII-SMD L.P., Blackstone Real Estate Holdings (Offshore) VII-NQ-ESC L.P.,
Blackstone Real Estate Holdings (Offshore) VII-NQ L.P., Blackstone Real Estate Partners Europe
IV.F-NQ L.P., Blackstone Real Estate Partners Europe IV.2-NQ L.P. (collectively, the
“Blackstone Entities”), Sforza Holdco S.à.r.l. (“Sforza”), and Kryalos SGR S.p.A (“Kryalos”), in
its capacity as management company of Delphine Fund (“Delphine”; Blackstone, the Blackstone
Entities, Sforza, and Kryalos collectively referred to as “Plaintiffs” or the “Purchasing Group”)
bring the following action seeking declaratory and monetary relief against Defendant RCS Media
Group S.p.A. (“RCS”) and allege as follows:
NATURE AND SUMMARY OF THE ACTION
1. By this action, Plaintiffs seek redress for RCS’s malicious interference with
Plaintiffs’ nearly completed sale of certain properties to a third party—properties Plaintiffs
purchased from RCS five years ago. In 2013, following a broad and lengthy sales process
conducted by RCS and its advisors, Plaintiffs purchased from RCS commercial buildings in Milan,
Italy (the “Properties”) and Plaintiffs leased the Properties back to RCS (collectively, the “2013
Transaction”). Two years after the 2013 Transaction, RCS vacated a majority of the Properties.
Thereafter, Plaintiffs invested substantial funds in renovating and improving the vacated portions
of the Properties, and, over time and with significant efforts, Plaintiffs attracted new commercial
anchor tenants to bring the Properties to full occupancy.
2. Having substantially increased the value of the Properties over the past five years
(during which period RCS has never complained about the 2013 Transaction), Plaintiffs are now
seeking to sell their interests in the Properties. In this connection, Plaintiffs recently entered into
a letter of interest to sell the Properties to a prospective purchaser, Allianz Real Estate GmbH
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(“Allianz”). Plaintiffs and Allianz have agreed on all material terms for the sale of Plaintiffs’
interests in the Properties, and, as of several weeks ago, Plaintiffs and Allianz were on a path to
closing the contemplated sale.
3. Plaintiffs’ contemplated sale of their interests in the Properties to Allianz was
reported in the media. Since learning that Plaintiffs were nearing consummation of a sale of their
interests in the Properties, RCS, through its current controlling shareholder and Chairman Mr.
Urbano Cairo, has claimed that the 2013 Transaction is somehow “null and void” and should be
unwound, slandering Plaintiffs’ title to the Properties and interfering with Plaintiffs’ contemplated
transaction to sell their interests in the Properties to Allianz.
4. Following RCS’s assertion of its false and malicious claims, Allianz has indicated
that it will not go forward with the transaction unless and until RCS’s claims are withdrawn.
Plaintiffs have already incurred damages in the form of legal and other expenses arising from
RCS’s misconduct. Should Plaintiffs lose the opportunity to sell their interests in the Properties,
the damages caused by RCS, both economic and reputational, will exponentially increase.
5. By this action, Plaintiffs seek, in the first instance, a declaration that the 2013
Transaction is valid and is not null and void. Plaintiffs further seek compensatory damages, as
well as punitive damages, for the substantial injury caused by RCS’s tortious conduct in
maliciously and slanderously interfering with Plaintiffs’ efforts and expectancy to complete the
sale of their interests in the Properties.
JURISDICTION AND VENUE
6. This Court has personal jurisdiction over Defendant RCS pursuant to CPLR
§ 302(a)(1). The Claims in this Complaint arise from RCS’s transaction of business in New York.
When RCS resolved to divest its real estate holdings, it, and its agents and advisors, purposefully
and deliberately targeted New York-based real estate investment firms, such as Plaintiff
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Blackstone, as potential purchasers. RCS, and its agents and advisors, conducted a year-long sales
process, during which they sent materials to, and solicited bids from, Blackstone and, on
information and belief, other New York-based investors. RCS, and its advisors and agents,
engaged in substantial negotiations with Blackstone throughout this period, involving multiple
rounds of providing information and exchanging formal proposals. As RCS was aware, a number
of New York-based Blackstone executives were involved in the negotiation of, and decision-
making processes for, the 2013 Transaction with RCS. For example, Blackstone’s investment
review and approval processes for the 2013 Transaction occurred through Blackstone committees
based in New York. Further, in connection with closing the 2013 Transaction, drawdowns from
Blackstone’s investors occurred in New York, and transfers of funds to pay €120 million to RCS
were executed, in part, through New York bank accounts.
7. This Court also has personal jurisdiction over RCS pursuant to CPLR § 302(a)(3).
Plaintiffs are in a business relationship with Allianz, and Plaintiffs were near consummating a sale
of their interests in the Properties to Allianz. RCS intentionally and tortiously interfered with
Plaintiffs’ business relationship with Allianz by contriving claims and threatening frivolous legal
action to impede the contemplated sale of the Properties—in an attempt to extort Plaintiffs. The
claims in this Complaint also therefore arise from RCS’s tortious interference. RCS’s tortious
interference is causing injury to Blackstone in New York by impeding the proposed sale of
Plaintiffs’ interests in the Properties. RCS was aware that its interference would have
consequences for Blackstone, both economically and reputationally, in New York. This Court
therefore has jurisdiction to hear Plaintiffs’ claims against RCS for its tortious conduct causing
injury within New York.
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8. Venue is proper in this Court pursuant to CPLR § 503, as the Plaintiff Blackstone
Entities reside in New York County. Moreover, a significant portion of the events leading to the
claims in this Complaint occurred in New York and RCS’s tortious conduct caused substantial
injury here.
THE PARTIES
9. Plaintiff Blackstone is a Delaware limited partnership with its principal offices at
345 Park Avenue, 31st Floor, New York, NY 10154. Blackstone is an investment firm specializing
in equity investments in real property throughout the world. Blackstone is a subsidiary of The
Blackstone Group L.P., also based in New York, which is one of the leading investment firms in
the world.
10. Plaintiff Blackstone Real Estate Partners Europe IV-NQ L.P. is a limited
partnership incorporated in the Cayman Islands with its principal offices at 345 Park Avenue, 31st
Floor, New York, NY 10154. Blackstone Real Estate Partners Europe IV-NQ L.P. indirectly owns
75.6% of the share capital in Plaintiff Sforza.
11. Plaintiff Blackstone Real Estate Holdings Europe IV-NQ ESC L.P. is a limited
Floor, New York, NY 10154. Blackstone Real Estate Holdings Europe IV-NQ ESC L.P. indirectly
owns 0.400% of the share capital in Plaintiff Sforza.
12. Plaintiff Blackstone Family Real Estate Partnership Europe IV SMD L.P. is a
limited partnership incorporated in the Cayman Islands with its principal offices at 345 Park
Avenue, 31st Floor, New York, NY 10154. Blackstone Family Real Estate Partnership Europe IV
SMD L.P. indirectly owns 0.667% of the share capital in Plaintiff Sforza.
13. Plaintiff Blackstone Real Estate Partners (Offshore) VII-NQ L.P. is a Delaware
limited partnership with its principal offices at 345 Park Avenue, 31st Floor, New York, NY
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10154. Blackstone Real Estate Partners (Offshore) VII-NQ L.P. indirectly owns 6.067% of the
share capital in Plaintiff Sforza.
14. Plaintiff Blackstone Real Estate Partners (Offshore) VII.F-NQ L.P. is a Delaware
limited partnership with its principal offices at 345 Park Avenue, 31st Floor, New York, NY
10154. Blackstone Real Estate Partners (Offshore) VII.F-NQ L.P. indirectly owns 7.933% of the
share capital in Plaintiff Sforza.
15. Plaintiff Blackstone Real Estate Partners (Offshore) VII.TE.1-8-NQ L.P. is a
Delaware limited partnership with its principal offices at 345 Park Avenue, 31st Floor, New York,
NY 10154. Blackstone Real Estate Partners (Offshore) VII.TE.1-8-NQ L.P. indirectly owns
16. Plaintiff Blackstone Family Real Estate Partnership (Offshore) VII-SMD L.P. is a
limited partnership incorporated in Alberta, Canada, with its principal offices at 345 Park Avenue,
31st Floor, New York, NY 10154. Blackstone Family Real Estate Partnership (Offshore) VII-
SMD L.P. indirectly owns 0.200% of the share capital in Plaintiff Sforza.
17. Plaintiff Blackstone Real Estate Holdings (Offshore) VII-NQ-ESC L.P. is a limited
partnership incorporated in Alberta, Canada, with its principal offices at 345 Park Avenue, 31st
Floor, New York, NY 10154. Blackstone Real Estate Holdings (Offshore) VII-NQ-ESC L.P.
indirectly owns 0.200% of the share capital in Plaintiff Sforza.
18. Plaintiff Blackstone Real Estate Holdings (Offshore) VII-NQ L.P. is a limited
partnership incorporated in Alberta, Canada, with its principal offices at 345 Park Avenue, 31st
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Floor, New York, NY 10154. Blackstone Real Estate Holdings (Offshore) VII-NQ L.P. indirectly
19. Plaintiff Blackstone Real Estate Partners Europe IV.F-NQ L.P. is a limited
partnership incorporated in Delaware with its principal offices at 345 Park Avenue, 31st Floor,
New York, NY 10154. Blackstone Real Estate Partners Europe IV.F-NQ L.P. indirectly owns
20. Plaintiff Blackstone Real Estate Partners Europe IV.2-NQ L.P. is a limited
Floor, New York, NY 10154. Blackstone Real Estate Partners Europe IV.2-NQ L.P. indirectly
21. Plaintiff Sforza is a private limited liability company, incorporated under the laws
of Luxembourg, with its registered office at 2-4 rue Eugène Ruppert, L-2454 Luxembourg, Grand
Duchy of Luxembourg. Sforza is wholly owned by the Plaintiff Blackstone Entities. Sforza
wholly owns the units of the investment fund Delphine and, along with the other Plaintiffs, was a
party to the 2013 Transaction.
22. Plaintiff Kryalos is a sole shareholder company, incorporated under the laws of
Italy, with its registered office at Via Brera no. 3 – 20121 Milan, Italy. Kryalos is the legal
representative of Delphine and manages the real property that was involved in the 2013
Transaction. Delphine is a closed-end alternative real estate investment fund, organized under the
laws of Italy. Delphine is the direct owner of the Properties and is wholly owned by Plaintiff
Sforza. Plaintiff Kryalos is Delphine’s designated legal representative under Italian law. Delphine
was a party to the 2013 Transaction.
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23. Defendant RCS is incorporated under the laws of Italy as a società per azioni, with
its registered office at Via Angelo Rizzoli no. 8, Milan, Italy. RCS is an international media
company, with operations in several countries around the world. RCS is controlled by Mr. Urbano
Cairo, who, through his company Cairo Communication S.p.A. (“Cairo Communication”),
completed a hostile takeover of RCS in 2016. Mr. Cairo, who was a major RCS shareholder before
the 2013 Transaction, is now the Chairman of the Board, Chief Executive Officer, and controlling
shareholder of RCS. RCS entered the 2013 Transaction with Plaintiffs and is now, through Mr.
Cairo, claiming that the 2013 Transaction is null and void.
BACKGROUND
I. RCS DETERMINES TO MARKET AND SELL THE PROPERTIES
24. Defendant RCS is an international multimedia publishing group that operates in
daily newspapers, magazines and books, radio broadcasting, new media, and digital and satellite
television. RCS is a Milan-headquartered public company that employs over 5,500 people and has
a presence in, among other countries, Portugal, Russia, Spain, China, and the United States.
25. In 2012, the then-leadership of RCS, supported by financial and legal advisors,
including investment bank Credit Suisse, crafted a strategic plan (the “Development Plan”) to be
executed over the following three years. RCS’s three-year Development Plan included, among
other things, initiatives to address the company’s capital structure and to pursue sales of various
non-core assets, including certain magazines and real estate assets—in order for the company to
focus on its core businesses, digital offerings, and overall company efficiency. In June 2013, for
example, RCS agreed to sell 14 magazines it had owned as part of the Development Plan. Also in
June 2013, RCS signed a loan agreement with several banks, including Unicredit S.p.A., BNP
Paribas, and Intesa Sanpaolo S.p.A., for €600 million. And, in July 2013, RCS successfully
completed a rights offering for €410 million that reduced the company’s leverage and extended its
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debt maturity profile by several years. Leading Italian corporations, including FIAT, Mediobanca,
Pirelli, and Intesa Sanpaolo, all participated in RCS’s July 2013 rights offering. These transactions
with major banks and corporations reflected broad confidence in RCS’s business and prospects in
advance of the 2013 Transaction.
26. The Development Plan also called for RCS to seek to sell certain principally non-
core commercial properties it owned in Milan, including the Properties. The Properties consist of
three interconnected commercial buildings (Blocks 1, 2, and 3), which today house multiple
businesses and commercial tenants—including, in a portion representing 38% of lettable area,
RCS. In connection with the Development Plan’s directive to sell the Properties, RCS retained
Banca IMI S.p.A. (“Banca IMI”, a subsidiary of Banca Intesa) as its financial advisor. Banca IMI
is one of Italy’s leading financial institutions, active in investment banking, mergers and
acquisitions, real estate, structured finance, and capital markets, and Banca IMI operates at a global
level. Banca IMI is headquartered in Milan, and has a subsidiary in New York, dedicated to
serving clients and conducting business in the United States. The Chairman of Banca IMI, Gaetano
Miccichè, is currently a member of the RCS Board of Directors.
27. The marketing and sales process for the Properties spanned over a year. In
connection with this process, and as reflected in press releases issued by RCS, RCS and Banca
IMI utilized a number of independent appraisers for property valuations of the Properties, and
Banca IMI initiated contacts with over 30 potential real estate investors from across the globe,
including several in New York, seeking prospective purchasers for the Properties. Banca IMI then
followed up these initial communications by providing materials and information to, and soliciting
bids from, 16 of these investors, including several located in New York—such as Blackstone,
KKR, Starwood, and Cerberus.
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28. Banca IMI and RCS received non-binding offers from five potential purchasers,
including, on information and belief, at least two New York-based real estate investors, to purchase
the Properties.
II. RCS AGREES TO THE 2013 TRANSACTION WITH BLACKSTONE
29. After evaluating the five non-binding offers received for the Properties, RCS and
Banca IMI determined to enter into exclusive negotiations with Blackstone. Blackstone’s initial
bid for the Properties, made on July 8, 2013, was €108 million. On July 29, 2013, Blackstone
raised its offer to €114 million and on August 1, 2013, Blackstone raised its offer to €115 million.
Blackstone’s offers were not contingent on obtaining financing from outside sources, meaning that
Blackstone would be able to proceed with the transaction without delay. Based on Blackstone’s
August 1 bid, on August 7, 2018, RCS agreed to the continuation of exclusive negotiations with
Blackstone.
30. Following a period of due diligence and further negotiations, on November 13,
2013, RCS issued a press release announcing that RCS and Blackstone had entered into a
preliminary agreement for the sale of the Properties for €120 million. The preliminary agreement
also contemplated leasing back the Properties to RCS for varying lease lengths (two years for 62%
of the lettable area and nine years for 38% of the lettable area). RCS’s November 13 press release
noted that the sale of the Properties to Blackstone “concludes a long and comprehensive process,
which was examined in various board meetings, and was approved on November 5, 2013.” The
press release further detailed the sales process for the Properties, including RCS’s and Banca IMI’s
approaches to 30 real estate investors, the use of property valuations by independent appraisers,
and the receipt of non-binding offers from five bidders. Finally, the November 13, 2013 RCS
press release pronounced the offer by Blackstone as “the most attractive bid,” explained that the
€120 million sale price to be paid by Blackstone was “substantially in line with the valuation by a
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leading real estate advisor for” RCS, and noted that the price to be paid was higher than the
carrying value of the Properties on RCS’s books.
III.THE 2013 TRANSACTION
31. As noted in RCS’s press release, on November 13, 2013, RCS and Sforza entered
into the Preliminary Asset Purchase Agreement (the “APA”). Sforza is an entity that was created
for the purpose of purchasing the Properties, and 100% of the shares of Sforza are owned indirectly
by the Blackstone Entities. The APA contemplated RCS and Sforza, or a designee of Sforza,
entering into final sales agreements for the Properties and RCS entering into lease agreements for
certain substantial areas of the Properties.
32. On or about December 23, 2013 and March 6, 2014, RCS entered into final sales
agreements for the Properties with Delphine, Sforza’s designee (Sforza owns 100% of the units of
Delphine). In connection with the final sales agreements, the Blackstone Entities also entered into
an agreement with RCS, whereby the Blackstone Entities agreed not to sell the Properties for a
period of at least one year.
33. At the same time, RCS also entered into lease agreements relating to the Properties
with BNP Paribas Real Estate Investment Management Italy (“BNP”), in its capacity as
management company for Delphine. BNP has since been replaced by Plaintiff Kryalos as the
management company for Delphine. The term of the lease agreement with RCS for Block 2, which
comprises 62% of the total Gross Leasable Area of the Properties, was only for two years—
significantly shorter than market standard lease terms (and therefore riskier for both Plaintiffs as
landlord and for financing banks).
34. In addition to RCS’s sale and lease back of the Properties being guided by highly
sophisticated financial and legal advisors, the 2013 Transaction was also overseen and monitored
by RCS’s Board of Statutory Auditors. In Italy, a company’s Board of Statutory Auditors is similar
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to an internal control and audit committee, except the Board of Statutory Auditors is made up only
of independent experts. The Board of Statutory Auditors works to ensure the proper administration
and operation of the company according to its code of ethics and relevant Italian law and
regulation.
35. At the end of 2013, RCS’s Board of Statutory Auditors issued its mandatory report
to RCS’s shareholders, in which the Board detailed its participation in, and supervision of, the
2013 Transaction. Among other things, the Board of Statutory Auditors reported on how it
“monitored the various phases of the [2013 Transaction],” “examined the
evaluations . . . concerning the ‘market’ value of the [Properties] and the consistency of the
purchase offers received by the Company,” and participated in several Board of Directors meetings
“in order to ensure that the decision-making process was taking place in the correct manner on the
basis of all information and elements for evaluation required to ensure that a reasonable decision
was made in terms of cost-effectiveness, in the best interest of the company . . . .”
IV.PLAINTIFFS FACED A DIFFICULT MARKET ENVIRONMENT WHEN THEY
ACQUIRED THE PROPERTIES, BUT OVERCAME THESE CHALLENGES BY
INVESTING IN IMPROVEMENTS AND ATTRACTING NEW TENANTS
36. When Plaintiffs executed the 2013 Transaction and purchased the Properties, they
faced a challenging market environment. Real estate fundamentals in 2013 in Europe, including
in Italy, were poor. Vacancy levels in Milan and elsewhere in Italy were well above historical
averages. And, confidence in the Italian economy was low. Italy had experienced a protracted
recession that continued into 2013, with the country’s Real GDP having contracted by 7% over
the previous five years, and unemployment was over 12%. In July 2013, S&P downgraded the
rating of Italy’s government debt to BBB, which is just two notches above “junk.”
37. Approximately two years after Plaintiffs acquired the Properties, RCS vacated
Block 2 (in synch with the two-year leases entered as part of the 2013 Transaction and with the
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Properties being non-core to RCS), which represented approximately 62% of the combined lettable
area, leaving that portion of the Properties unoccupied, non-income producing, and in need of
renovation. As a result of RCS vacating Block 2, the net rental income generated by the Properties
significantly decreased.
38. Following RCS’s departure from Block 2, Plaintiffs spent over €17 million just on
renovating Block 2 of the Properties, including by adding an additional entrance to Block 2 and
expanding the height of the building to create viable rental space on an additional floor. These
renovations transformed Block 2 from a more challenging single-tenant space to a flexible, multi-
tenant space, allowing Plaintiffs to divide Block 2 into three commercial rental units.
39. Following the renovations, Plaintiffs worked diligently to bring in new and
reputable anchor tenants. Leasing Block 2 was challenging, but over time and with significant
effort Plaintiffs were successful as they were able to attract three highly reputable commercial
tenants: UBI Banca, Loro Piana, and Cassa Depositi e Prestiti (a subsidiary of the Italian
government). These new leases brought the Properties to 100% occupancy and significantly
increased the rental income generated by the Properties, thereby increasing the market value of the
Properties overall.
V. PLAINTIFFS MARKET THE PROPERTIES FOR SALE FIVE YEARS AFTER THE
2013 TRANSACTION
40. After having invested substantial resources into renovations and improvements, and
having successfully acquired reputable long-term tenants for the newly renovated and fully
occupied Properties, Plaintiffs recently began to seek a potential purchaser for their interests in the
Properties, nearly five years after the 2013 Transaction.
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41. Plaintiffs began marketing the Properties to select investors in early 2018. After
preliminary discussions, Allianz emerged as the leading candidate to acquire Plaintiffs’ interests
in the Properties.
42. On June 14, 2018, Allianz provided Plaintiffs with a formal Letter of Interest,
proposing an exclusivity period to negotiate Allianz’s acquisition of the interests in the Properties.
Plaintiffs accepted Allianz’s proposal on June 22, 2018, establishing an exclusivity period.
43. During the exclusivity period, Plaintiffs and Allianz exchanged multiple drafts of
documents for the consummation of a transaction. By early July, Plaintiffs and Allianz had agreed
on all material terms and expected to sign a final binding agreement by the end of the summer,
with a closing to occur in September 2018.
VI.RCS INTERFERES WITH PLAINTIFFS’ SALE TO ALLIANZ
44. RCS’s Board of Directors lauded the 2013 Transaction in both the company’s 2013
Annual Report (issued by the RCS Board of Directors on March 10, 2014) and 2014 Annual Report
(issued by the RCS Board of Directors on March 11, 2015). In the 2013 Annual Report, in addition
to describing Plaintiffs’ bid as the “most economically and financially attractive,” the Board of
Directors also noted that “[t]hanks to [the 2013 Transaction], the Group’s debt is expected to
contract compared to December 31, 2013.” And, in the 2014 Annual Report, the RCS Board of
Directors described the 2013 Transaction as having had “a positive effect on financial expense
trends.”
45. In 2016, Mr. Urbano Cairo, via his company Cairo Communication, completed a
hostile takeover of RCS. Mr. Cairo is now the Chairman of the Board, Chief Executive Officer,
and controlling shareholder of RCS. Mr. Cairo, however, was not a newcomer to RCS in 2016.
In July 2013, several months before execution of the 2013 Transaction, Mr. Cairo acquired a 2.8%
stake in RCS. RCS’s 2013 Annual Report notes that before the 2013 Transaction was executed,
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Mr. Cairo wrote to RCS’s Board of Directors and to RCS’s Board of Statutory Auditors raising
objections to the contemplated 2013 Transaction. Nevertheless, on November 5, 2013, RCS’s
Board of Directors resolved to execute on the 2013 Transaction, and subsequently RCS took all
necessary actions to close the 2013 Transaction. And, thereafter, neither RCS nor Mr. Cairo ever
communicated to Plaintiffs any objection to the 2013 Transaction (until July 2018).
46. On July 10, 2018, an article appeared in the Italian national daily business
newspaper, MF-Milano Finanza, reporting on Allianz’s contemplated purchase of Plaintiffs’
interests in the Properties. The article reported that the parties were near an agreement whereby
Allianz would pay €250 million for Plaintiffs’ interests in the Properties.
47. On July 13, 2018, three days after publication of the article in MF-Milano Finanza,
RCS sent a letter to Plaintiffs, signed by Mr. Cairo as Chairman of RCS, claiming that the 2013
Transaction was somehow “null and void” because of, according to RCS, RCS’s financial
condition at the time of the 2013 Transaction and an imbalance in the terms and conditions and
benefits and returns among the parties to the 2013 Transaction.
48. The timing of RCS’s July 13 letter was not coincidental. Upon information and
belief, RCS and Mr. Cairo were aware that Plaintiffs were nearing a sale of their interests in the
Properties—whether that awareness stemmed from the MF-Milano Finanza article or from other
earlier sources—and RCS’s July 13 letter was therefore spurious, malicious, and extortionate, and
plainly aimed at slandering Plaintiffs’ title to the Properties and interfering with Plaintiffs’
contemplated sale transaction with Allianz.
49. Plaintiffs were compelled to immediately inform Allianz of RCS’s July 13 letter
and its malicious and slanderous claims. Allianz justifiably has since taken the position that it will
not consummate the purchase of Plaintiffs’ interests in the Properties until RCS’s claims are
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withdrawn or otherwise resolved. Plaintiffs have already incurred damages in the form of legal
and other professional fees expended to address the consequences of RCS’s spurious claims.
Plaintiffs’ damages, both economic and reputational, will increase exponentially if RCS’s
misconduct causes Plaintiffs to lose the opportunity to sell their interests in the Properties to
Allianz and to realize a return on investment for Plaintiffs’ investors. Plaintiffs’ economic and
reputational damage is being incurred in New York, where Blackstone is headquartered.
50. Since July 13, Plaintiffs have had numerous communications with RCS, requesting
that the company disavow its claim that the 2013 Transaction is null and void. Those
communications have proven to be futile. On November 8, 2018, undersigned counsel for
Plaintiffs emailed a letter to RCS and its Board of Directors, once again requesting that RCS
withdraw its spurious claims and stating that Plaintiffs would commence a lawsuit in a New York
court seeking declaratory relief and damages if RCS did not immediately take such ameliorative
actions.
51. On November 9, 2018, in response to undersigned counsel’s November 8 letter,
RCS commenced an arbitration in Milan seeking a determination that the 2013 Transaction is null
and void. For several reasons, RCS’s extortive claim that the agreements that comprise the 2013
Transaction are null and void should not be subject to adjudication under arbitration clauses in the
very contracts that RCS claims are a nullity. And, it is plain that a Milan arbitration is an
inappropriate and insufficient vehicle to address all of the parties, and all of the claims, involved
in this action.
COUNT I
(Declaratory Judgment)
52. Plaintiffs repeat the allegations contained in the preceding paragraphs as if fully set
forth herein.
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53. Pursuant to CPLR §3001, this Court is authorized to issue a declaratory judgment
settling the rights and legal relations of the parties.
54. There is a controversy between the parties concerning the validity and
enforceability of the 2013 Transaction.
55. Plaintiffs are entitled to a judicial declaration that the 2013 Transaction is valid and
is not void.
COUNT II
(Tortious Interference with Prospective Business Relations)
56. Plaintiffs repeat the allegations contained in the preceding paragraphs as if fully set
forth herein.
57. Plaintiffs had the real expectancy of prospective business relations with Allianz for
the sale of Plaintiffs’ interests in the Properties. The basic terms of the contemplated sale were set
forth in, among other writings, the provisions of the letter of interest between Plaintiffs and Allianz.
Plaintiffs had a real expectancy that Plaintiffs and Allianz would enter into an economically
advantageous business relationship.
58. Upon information and belief, Defendant RCS maliciously and intentionally
interfered with Plaintiffs’ prospective business relations with Allianz in an unlawful and wrongful
manner.
59. Upon information and belief, Defendant RCS was aware of Plaintiffs’ impending
plans to sell their interests in the Properties to Allianz and deliberately asserted a frivolous right to
rescind the 2013 Transaction in an attempt to slander title and impede the sale of the Properties by
inducing Allianz not to enter into a transaction, even though Defendant RCS knew it had no legal
basis to claim that the 2013 Transaction is now void, five years after its consummation. This
interference was conducted in a malicious, wrongful, and improper manner.
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60. Upon information and belief, but for Defendant RCS’s malicious interference with
Plaintiffs’ prospective business relations with Allianz, Plaintiffs would be in a position to move
forward with the transaction with Allianz.
61. As a direct and proximate result of Defendant RCS’s malicious and intentional
actions, Plaintiffs have suffered economic harm, including, without limitation, the incurrence of
legal fees and other expenses to address Defendant RCS’s spurious claims. Plaintiffs also face the
likely loss of revenues Plaintiffs would have derived had Plaintiffs and Allianz consummated the
sale of Plaintiffs’ interests in the Properties. Plaintiffs also face the incurrence of reputational
damage stemming from RCS’s misconduct—based on Plaintiffs’ inability to close on the
contemplated transaction with Allianz and to provide Plaintiffs’ investors with a return on their
investment in the Properties.
62. Accordingly, Plaintiffs have suffered damage as a result of Defendant RCS’s
intentional interference with Plaintiffs’ prospective business relations in an amount to be proven
at trial, but in any event an amount no less than $500,000 (the monetary threshold for the New
York County Commercial Division).
63. Defendant RCS’s tortious acts were of an egregious and morally culpable nature.
64. Accordingly, awards of compensatory damages and punitive damages to Plaintiffs
from Defendant RCS are justified, in amounts to be determined at trial.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor on their claims
for relief set forth above and award them relief, including, but not limited to, the following:
(i) Entry of a declaratory judgment order by this Court that the 2013 Transaction is not
void or voidable by Defendant RCS;
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(ii) Entry of an order against Defendant RCS for all monetary damages Plaintiffs have
suffered as a result of the wrongful conduct alleged herein, in an amount to be
determined at trial, but not less than $500,000;
(iii) Entry of an order against Defendant for punitive damages, in an amount to be
determined at trial; and
(iv) Such other and further relief as the Court deems just and proper.
Dated: November 20, 2018
New York, New York
Respectfully submitted,
_____/s/ Aaron H. Marks_________
Aaron H. Marks, P.C.
Matthew Solum, P.C.
Mark. B. Salomon
Alexander Talel
KIRKLAND & ELLIS LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: aaron.marks@kirkland.com
matthew.solum@kirkland.com
mark.salomon@kirkland.com
alex.talel@kirkland.com
Counsel to Plaintiffs Blackstone Real Estate
Advisors L.P., Blackstone Real Estate Partners
Europe IV-NQ L.P., Blackstone Real Estate
Holdings Europe IV-NQ ESC L.P., Blackstone
Family Real Estate Partnership Europe IV
SMD L.P., Blackstone Real Estate Partners
(Offshore) VII-NQ L.P., Blackstone Real Estate
Partners (Offshore) VII.F-NQ L.P., Blackstone
Real Estate Partners (Offshore) VII.TE.1-8-NQ
L.P., Blackstone Family Real Estate
Partnership (Offshore) VII-SMD L.P.,
Blackstone Real Estate Holdings (Offshore)
VII-NQ-ESC L.P., Blackstone Real Estate
Holdings (Offshore) VII-NQ L.P., Blackstone
Real Estate Partners Europe IV.F-NQ L.P.,
Blackstone Real Estate Partners Europe IV.2-
NQ L.P., Sforza Holdco S.à.r.l., and Kryalos
SGR S.p.A, in its capacity as management
company of Delphine Fund
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