Sloan-Kettering bails on Sutton tower buy, loses $5M deposit
November 18, 2008 03:46PM By Adam Pincus
360 East 57th Street
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.
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Comments
Anonymous
I bet this was painful for the brokers!
Comment #1 Posted By: Anonymous 11/18/08
This might hurt a little bit
Looks like Memorial might feel a small pinch and a burn!
Comment #2 Posted By: This might hurt a little bit 11/18/08
Anonymous
According to Massey Knakals website it is "SOLD". Maybe somebody should tell them to stop spending the commission?
Comment #3 Posted By: Anonymous 11/18/08
Anonymous
Would Massey Knakal be entitled to a commission on the deposit that was forfeited by the hospital?
Comment #4 Posted By: Anonymous 11/18/08
Anonymous
How many fundraisers does the hospital have to have in order to raise $5 million?
Comment #5 Posted By: Anonymous 11/18/08
Anonymous
I cant believe Sloan Kettering agreed to a 10% deposit on a deal this size. Their donors should be furious
Comment #6 Posted By: Anonymous 11/18/08
Anonymous
Some brokerage contracts include articles mentionning that if the deposit is left on the table, brokers are entitled to a % of that amount. I always put 10% in mine, if sellers agree it's all good....
Comment #7 Posted By: Anonymous 11/18/08
Anonymous
It takes a lot of dinners and fundraisers to raise $6M and now they are walking away from it? Unless they are hoping for a deal that would make the $6M loss worthwhile.
Comment #8 Posted By: Anonymous 11/18/08
Anonymous
where the plans to tear it down? if so,then this is a loss.
Comment #9 Posted By: Anonymous 11/18/08
Anonymous
by law they are entitled to a full commission but then it depends on the commission agreement that was made for that deal
Comment #10 Posted By: Anonymous 11/18/08
Anonymous
I don't understand. They didn't need major financing for this deal. They already had 10% down and they just walked away from the deal? Who is advising them on the deal, their patients?
Comment #11 Posted By: Anonymous 11/18/08
Anonymous
They are going to wait six months and get that same building for at least $10 million less. So they are actually going to profit probably.
Comment #12 Posted By: Anonymous 11/18/08
Anonymous
Brokers still get 10%
Comment #13 Posted By: Anonymous 11/18/08
Anonymous
The brokers get nothing. The city gets nothing. The hospital loses. The sellers lose. Everybody loses-except the lawyers.
Comment #14 Posted By: Anonymous 11/18/08
Anonymous
What ever happened to the case with massey inregard to paying unlicensed attornies? I guess they paid off the Dept of State also.
Comment #15 Posted By: Anonymous 11/18/08
Anonymous
Memorial Sloan-Kettering probably has had a major decrease in the value of its endowment funds and felt that spending $57 million on the building was imprudent at this time.
Comment #16 Posted By: Anonymous 11/19/08
Anonymous
I love all of these idiots posting on this site like they know MSK's strategy... sorry morons, speculate all you want but there's a reason the guys at the top are paid the big bucks. Continue playing arm-chair QB... from most of your posts that's probably all you morons are suited for.
Comment #17 Posted By: Anonymous 11/19/08
Anonymous
Hey Massey, I hear you are throwing another huge holiday party this year...
Comment #18 Posted By: Anonymous 11/19/08
Anonymous
No 17. you are correct. The reason the guys on the top are paid the big buck is because the know alot of idiot developers that listen to them. I'm still wondering how come the bridges of New york City isn't in Macklowe litigation.
Comment #19 Posted By: Anonymous 11/19/08
Robert I. Shapiro
Michael Gutnick and the other parties involved in the real estate transaction at Sloan Kettering are very knoweldgable professional real estate people. There are circumstances that would have justified Sloan Kettering from disengaging from this transaction that the Real Deal has been silient on or has no knowledge of. Depending on the what the underlying legal document state, who really knows how much of the deposit may be at risk? The fact is that Sloan Kettering is acquiring another property that would make more economic sense than the 57th Street purchase. As for the earning of a brokerage commission, if the contract is signed and there are no caveats that would prevent a closing, the broker has earned his commission. If the contract required title to pass than the broker is not entitled to a commisison until title pasess. Robert Shapiro City Center Real Estate, Inc
Comment #20 Posted By: Robert I. Shapiro 11/22/08