Cabrini Medical completes $83M sale

Update (5:37 p.m.) The $83.1 million disposition of the former Cabrini Medical Center, located in the Gramercy Park area at 217 East 19th Street between Second and Third avenues, is complete, according to Grubb & Ellis, which represented Cabrini. The buyer, SKI Realty, an affiliate of Memorial Sloan-Kettering Cancer Center, said it will renovate the 400,000-square-foot complex for use as a cancer outpatient center.

The U.S. Bankruptcy Court initially approved in the transaction in February. The medical center had served as a 455-bed hospital until falling into financial troubles. The hospital shut down in March 2008 and the Cabrini filed for bankruptcy in July 2009. Vincent Carrega and Neil Helman, both executive vice presidents with Grubb & Ellis, helped broker the deal. Carrega said the disposition process took longer than a typical building sale because of the building’s bankruptcy status and a collection of existing tenants at the center.

“The burden [was] on the seller to deliver the building vacant. We needed to negotiate buy out agreements with four tenants [that were] regulated by the New York State Department of Health,” Carrega explained.

The brokers, who began marketing the building in late summer 2009, said they pursued a variety of buyers — not just medical companies — because of the somewhat rocky healthcare industry.

“Finding [MSK] was a needle in the haystack kind of search. In the market we’re in, hospitals typically aren’t expanding,” Carrega said.

Education institutions and residential developers were among the other potential buyers that Grubb & Ellis pursued, Helman said.

The property had one previous bidder, whose identity Carrega did not reveal, which had submitted an $80 million offer. Sloan-Kettering ultimately gained control of the property by outbidding the other party.

Although the cancer center has not announced when it plans to open its facility, Helman said it’s first going to renovate the property.

“My understanding is they are creating a major overhaul of the facility,” Helman said, describing the medical complex as “dated.”

Even so, Carrega said the building will be easily adapted into a modern facility.

“You have hospital bones here, you have the infrastructure,” Carrega said. “This was a hospital — there is a certain benefit to continuing the use.”