The commercial real estate brokerage CBRE is facing a lawsuit from a former client after failing to disclose it represented both sides in a leasing deal, among other things. A real estate investor is suing CBRE for more than $11.5 million in damages over a Washington, D.C., private school lease, also claiming CBRE misled them on the tenant’s financial health.
The suit was filed by affiliates of 601W Cos. in the New York State Supreme Court, and the case centers around a 600,000-square-foot sublease for private school Whittle School & Studios. A 30-year sublease was signed in 2018 with a rent of $28 million annually and commenced in July 2019. The Whittle School paid rent for 9 months before defaulting on payments in April 2020. The private school has faced major financial problems and hasn’t paid any rent since then, and it’s now in default for more than $27 million, according to the lawsuit.
CBRE hasn’t filed an official response to the lawsuit yet, but they indicated that they plan to dispute the claims. “We believe our representation of the plaintiff was proper, and we look forward to addressing this matter in the proper legal forum,” a CBRE spokesperson said in a statement. 601W Managing Principal Mark Karasick admitted that representing both sides in a commercial real estate deal is common practice and sometimes works well, but it didn’t this time. “When it doesn’t work well, you’ve got conflicts,” Karasick said. “And they’ve got big conflicts.”