The Durst Organization is projected to spend about $130 million to acquire three parcels where it plans to build a massive $1.5 billion residential and commercial development known as Hallets Point in Western Queens, several sources told The Real Deal.
The firm, headed by Douglas Durst, said it would pay more than $100 million for the parcels, but hadn’t disclosed a more precise figure. The purchase of the three land parcels is expected to cost about $100 million, one insider said, with the additional expenses coming in the form of soft costs related to the long-term, complex assemblage the New Jersey-based firm Lincoln Equities Group orchestrated over the past eight years.
Durst closed on two of the parcels for a total of $76.9 million, but has yet to close on the third, which has a contract purchase price of $7.5 million, and under conditions includes an option to remain in the deal. However, the final figure and terms are being disputed in court.
The project is expected to be part of a complete transformation of the Western Queens neighborhood. Durst plans to build 2,404 affordable and market-rate units there, in partnership with Lincoln, which retains a 10 percent stake in the deal. The project also includes retail space, a supermarket and a school. Nearby, Alma Realty is building a 1,700-apartment project.
A review of court filings and property records reveals the labyrinthine process through which Lincoln, headed by Joel Bergstein and David Weinstein, assembled the site. Court records also suggest that Lincoln never planned to be the lead developer, but always saw itself as the assembler instead.
Timeline
The first contract associated with the assemblage available in public records was signed in May 2006, as the prior real estate boom was peaking, for 26-02 to 26-40 and 27-02 First Street along a block-and-a-half of East River waterfront. The land was owned by an entity known as Famitech, which was controlled by jeweler David Bassalali. This contract was for the largest of the three blocks of land Lincoln ultimately controlled through contracts. The final sale price was $58 million.
The next parcel to be locked in by a contract, 27-50 First Street, was just south of those parcels. In March 2007, real estate investor Michael Gindi went into contract to buy it from Aristidis Zaharopoulos, who owned the land through his firm Zavas Realty.
Three months later, a Mordechai Rumpler signed a contract with Isaac Deutsch’s Astoria Equities 2000, a contract that was later assigned to Lincoln.
In August 2008, Gindi assigned his contract to Lincoln, shortly after which Lincoln went public with its plans to seek a rezoning of the area and build 2,400 apartment units in several high-rise towers.
Over the next several years, Lincoln quietly pursued its goals, filing plans with the City Planning Department in 2009 and the public review process kicking off in 2011.
In the last three years, Lincoln ramped up its activity, spending more than $1.7 million in lobbying and other expenses to move the project forward, city lobbying records show.
In mid-to-late 2013, Durst entered the fray. Insiders said — and operating agreements indicate — that Lincoln was always looking to sell its controlling stake to a larger developer.
The New York City Council approved Lincoln’s plan in October 2013. Nearly a year later, on September 22, Zavas Realty sold its parcel to Durst for $18.9 million, and two days later Famitech closed its sale to Durst for $58 million.
The Deutsch parcel, which was set to close at the latest on September 15, has not yet closed. Now, Deutsch and Lincoln are trading lawsuits in Queens County, related to how much control Durst has over the project, a battle that could cause lengthy delays.
Legal wrangling
Lincoln accused Deutsch of being unhappy with the planned compensation, saying that caused Deutsch to balk at the sale and dispute the terms of the deal.
“Deutsch knows full well that Lincoln did in fact sell – that is, caused Hallets A Development Company to sell – the project site to Durst, and that Durst controls and will be developing the project,” said Stephen Meister, a partner with the law firm Meister, Seelig & Fein, which is representing Lincoln.
Deutsch’s attorney sees it far differently, arguing that his client is being shooed from a great deal.
“They have shamefully portrayed Astoria Equities as just a land owner which is refusing to close to ‘extort money,'” David Tannenbaum, a partner with the law firm Stern Tannenbaum & Bell, said. “Lincoln had an obligation to protect Astoria Equities’ interests but… instead secretly negotiated an unlawful deal to sell the development property in which Lincoln retains an interest.”
Yesterday, attorneys representing both sides agreed that there would be no sale of the property pending a hearing set for October 31.