B. Tuckey Devlin (top left) and David Workman (not pictured) sued Related Companies over Ocean Park Apartments in Far Rockaway. Jeff Blau (bottom left), is president of Related.

Two real estate investors filed a lawsuit seeking at least $390 million from developer Related Companies claiming the firm misled them when it partnered with the pair to buy the Far Rockaway affordable housing complex Ocean Park Apartments in 2005. Investors David Workman and B. Tuckey Devlin, partners in an entity called DB Development, claim Related induced them into partnering with it, but then used the deal for its own political advantage. The individuals claim Related and its subsidiary Related Apartment Preservation, assured them that if they bought the complex together, it would remove the 602-unit property at 125 Beach 17th Street from the Mitchell-Lama affordable housing program and convert it to market-rate apartments or condominiums. Such a move could have netted $200 million in profits, the suit filed in New York State Supreme Court Tuesday says. But it never happened and the property has been maintained as an affordable complex. “[Related’s] refusal to withdraw the property from the [affordable housing program] has completely eviscerated the value of [DB Development’s] rights to ‘cash out,’” the complaint says. “The principal, if not sole, reason for refusing to withdraw from the [affordable housing program] was so that Related could curry favor with federal, New York City and New York state officials and politicians with respect to other lucrative real estate ventures,” the suit continues. The suit cites a November 2009 interview with Jeff Blau, Related’s president, on The Real Deal Web site in which he was quoted saying, “For us, it’s about preservation, versus conversion to market rate.” Blau was not named in the suit. [more]