The Real Deal New York

Number games: How sales at 160 Leroy weren’t what they seemed

Developer Ian Schrager inflated the number of units in-contract, according to TRD analysis of public records and deal sheets
By Kathryn Brenzel | August 06, 2018 07:00AM

Ian Schrager and 160 Leroy Street (Credit: Getty Images and iStock)

When Ian Schrager publicly touted that 40 percent of the units at 160 Leroy were in contract, the ink was drying on just three such agreements.

Schrager told news outlets in 2015 that just two weeks after launching sales in the luxury condo building, 40 percent of its then-49 units (now 57) were in contract. That would put the number of units in contract at about 20. But public records and deal sheets for the building show that only three contracts were signed when Schrager announced the in-contract tally on Nov. 19, 2015.

Three units went into contract between Nov. 16 and 20, and four more units followed that month. Another five went into contract in December, meaning that by the end of the year, deals at the building still didn’t reach the 40 percent mark.

Schrager, of course, isn’t the only developer to fudge such numbers. As The Real Deal previously reported, many developers and brokers exaggerate sale velocity. The idea is to boost the appearance of a project’s success in a highly competitive market, to create an “everyone’s doing it” hype. Such number games sometimes aren’t always outright lies exactly, but instead reflect contracts sent out or unofficial agreements reserving the units.

False sales updates, however, have become the subject of legal battles over the years. Buyers at the Trump Organization and Bayrock Group’s Trump Soho sued the developers in November 2011, alleging that they bought apartments based on incorrect sales data. Ivanka Trump had told Reuters that 60 percent of the units were sold when the tally actually stood at 13 to 30 percent, according to the New York Times. The lawsuit was subsequently settled.

It’s not exactly clear what led to the discrepancy in the case of 160 Leroy. It’s also possible that some units were set aside for known buyers; Schrager himself purchased a $15 million unit in the building. He declined to comment.

This issue has sprung up in an ongoing lawsuit against Douglas Elliman. Brian Taylor, an condo owner at 160 Leroy, alleges that the brokerage concealed the fact that it was a dual agent — meaning in this case that it represented both one of the building’s sponsors, the Vector Group, and the buyer. Dual agency is legal in New York, but brokers are required to disclose that they are representing the owner and buyer simultaneously. In his lawsuit, Taylor says that he was pressured into buying into the building but wasn’t aware of the potential conflict.

Douglas Elliman declined to comment. Howard Lorber, who heads Douglas Elliman and the Vector Group, didn’t return messages seeking comment. Other investors in the project, Ares Real Estate and the Witkoff Group, declined to comment.

Deal sheets for the building were provided to Taylor’s attorney, Peter Scoolidge, as part of discovery in the lawsuit. The discrepancy between the number of units in-contract and what was announced is not yet part of the lawsuit.

“We’re investigating this matter further to see if it warrants any additional claims in the case,” Scoolidge said.

The sale of one of the building’s penthouses recently made headlines as the most expensive home ever sold below 14th Street in Manhattan. The unit, purchased by Philadelphia 76ers owner Michael Rubin, went into contract in October 2017, and the sale closed last month at $43.5 million.