Memorial Sloan-Kettering Cancer Center backed out of a deal to purchase a 25-story Sutton Place apartment building for $57 million, losing its $5.7 million deposit, a source with knowledge of the deal said.
The hospital went into contract for the 50-unit, Weinberg Properties-owned Sutton Place building, at 360 East 57th Street, just under a year ago, but backed out last week before the expected closing this week, the source said. The hospital, at 1275 York Avenue at 69th Street, did not need financing for the tower, which was slated to be used as housing for staff and doctors, the person said.
Weinberg’s president, Samuel Weinberg, declined to comment. The hospital did not immediately respond to a request for comment.
The hospital was represented by Cushman & Wakefield in the deal and the building was represented by Massey Knakal Realty Services.
The tower has 85,000 square feet of commercial space and about 15,000 square feet of commercial and storage space, according to Propertyshark.com, giving it a price of $570 per square foot.
Memorial Sloan-Kettering is considered a well-funded institution that would be able to withstand the loss of the down payment, hospital industry sources said.
Craig Evans, senior managing director at real estate services firm Colliers ABR, who was not involved in the deal, said buyers are pulling out of deals as real estate values decline.
It is not clear why the hospital reneged on the deal, but contracts are generally broken when a property has lost more value than the deposit is worth or the buyer cannot get financing, he said.
“There are contracts being dropped with some regularity now because we had such a run-up in values over the past two years,” he said.