A real estate investor that owns the last of three pieces that the Durst Organization needs to develop a $1.5 billion project in Astoria known as Hallets Point is holding out beyond the original September closing date, casting a shadow of uncertainty over the megaproject.
In 2007, The Isaac Deutsch-led Astoria Equities 2000 signed a contract with New Jersey-based Lincoln Equities Group to sell the property, located at 1-02 26th Avenue between First and Second streets, for $7.5 million. The sale was slated to close on September 15 of this year, but is yet to close.
The dispute could delay the massive 2.5 million-square-foot project that the Douglas Durst-led Durst Organization is spearheading at Hallets Point, where it plans to develop residential towers with 2,400 market-rate and affordable units.
“Unless the agreement expressly prohibits a flip, assignment [or other transfer, the dispute] may be viewed as merely an instance where a seller, upon finally becoming aware of the ultimate purchaser’s true identity and financial ability, attempts to hold out for a nuisance value premium from the purchaser in order to close quickly without resort to legal process,” Terrence Oved, a partner with the law firm Oved & Oved, said. He is not involved in this case.
Lincoln Equities, headed by Joel Bergstein and David Weinstein, had locked in three parcels with three different owners over the course of the last eight years. At the same time, it shepherded the project through the city’s complex land use process to change the zoning from manufacturing to residential.
As part of the sale process, Lincoln assigned its contract on the other two parcels to Durst. The first covering 26-02, 26-40 and 27-01 First Street, sold for $58 million and the other, from 27-50 to 27-86 First Street, for $18.9 million, and closed last month.
The same was expected to occur with the Deutsch property. However Deutsch balked, prompting Lincoln to ask a Queens State Supreme Court judge to enforce an arbitration agreement. That case is pending.
Then on October 1, Deutsch sued Lincoln, Durst, Bergstein, Weinstein and others, alleging a number of improprieties, including breach of the operating agreement.
“Astoria Equities, which agreed to receive substantially less than fair market value in cash… because it also would be receiving and equity interest… would be forced to ‘cash out,’” Deutsch’s complaint says.
Deutsch did not respond to a request for comment. Lincoln’s lawyer Stephen Meister said Deutsch’s suit was frivolous.
“In an attempt to extort a multi-million dollar hold-up payment… Astoria Equities and its principal Isaac Deutsch refused to close on a binding sale contract, and have brought a 27-count ‘kitchen-sink’ complaint in the Queens County Supreme Court,” Meister said. He plans to file response papers tomorrow.