Condo board can’t stop sale of 1MDB penthouse at $33M discount

Walker Tower unit tied to Malaysian scandal trades at 64 percent below 2014 price

TRD New York /
Sep.September 02, 2020 05:36 PM
Walker Tower at 212 West 18th Street (iStock; Courtesy JDS, Core NYC)

Walker Tower at 212 West 18th Street (iStock; Courtesy JDS, Core NYC)

The buyer of a scandal-tinged penthouse at the Walker Tower in Manhattan might not receive the sunniest of receptions on move-in day.

The Chelsea building’s condo board tried to block the sale of the full-floor unit by exercising its right of first refusal. The board argued that the $18.25 million sale price brokered by the Department of Justice — which seized the unit as part of the 1MDB corruption probe — would devalue their homes. The unit last traded in 2014 for $50.9 million, a Downtown record at the time.

But the board could not stop the sale: The deal closed Aug. 21, according to property records. The buyer was identified as Gotham Tower LLC. The entity’s signing member was Ron Vinder, a financial adviser with Morgan Stanley Private Wealth Management. Vinder declined to comment, as did Core Real Estate, which represented the buyer and seller.

A source familiar with the matter said the buyer plans to live in the nearly 6,000 square-foot apartment atop the Art Deco building at 212 West 18th Street, which Michael Stern’s JDS Development converted to condos nearly a decade ago.

Despite the closing, condo board members plan to fight on. Lawyer David Berkey said they were appealing an earlier court decision that found the board did not have a right of first refusal. (The ruling paved the way for the sale to close.) If successful, the appeal could allow the board to void the sale and look for a higher bidder, Berkey said.

The Department of Justice did not respond to requests for comment.

The dispute has roots in a political scandal that went all the way to the top of the Malaysian government and ensnared several luxury properties in New York.

The Walker Tower penthouse was linked to Abu Dhabi businessman Khadem al-Qubaisi, whom federal prosecutors accused of paying for the property using money misappropriated from the Malaysian state fund, 1Malaysia Development Bhd., also known as 1MDB.

(Separately, the Department of Justice announced Wednesday it had reached a settlement with “The Wolf of Wall Street” producer Riza Aziz to give up his claims on more than $60 million worth of assets, including three properties in New York, Los Angeles and London, tied to the 1MDB scandal.)

The ownership structure for the penthouse was layered: al-Qubaisi signed a purchase agreement for the unit in 2013 and later assigned the contract to an LLC managed by businessman Neil Moffitt, according to prosecutors.

In 2015, the property was listed for $70 million. When no buyers came forward, the asking price was dropped to $55 million.

In 2016, authorities moved to seize the property, but those plans were put on hold, pending a criminal investigation.

Last January, with the luxury market dragging, the asking price was reduced to $35 million. That same year al-Qubaisi was sentenced to 15 years in prison.

The Department of Justice filed a forfeiture lawsuit in California seeking to take ownership of the penthouse and handle the sale. Meanwhile, the board had a lien dating back to 2016 for unpaid common charges, which, combined with other fees and charges, amounted to hundreds of thousands of dollars.

In a consent judgment this May — an agreement reached by both parties — federal Judge Dale Susan Fischer determined that “all right, title, and interest” the board had in the property would be forfeited to the government. The judge also held that the fees owed to the board would be paid out from the proceeds of the sale.

But when the board learned of the $18.25 million contract, it sought to exercise its first right of refusal, which, under the building’s bylaws, meant getting consent from a majority of residents in the building. “The contract price can only be described as steeply distressed and unrealistic and one which could adversely affect the market value of other homes at Walker Tower,” Berkey told the Wall Street Journal.

The board started soliciting offers and found a person who would pay $2.5 million more for the unit, then relist it at a higher price, according to court records. (It had been reported that the board planned to buy and relist it, but when asked whether the new buyer was someone in the building, Berkey said he was not at liberty to comment.)

In late July, after the dispute went back to court, Judge Fischer rejected the board’s argument, finding that the consent judgment had wiped out its right of first refusal.

Running out of options, the board filed a last-ditch application to the federal court, asking for the sale to be stayed until the appeal was decided.

The court refused.

Write to Sylvia Varnham O’Regan at [email protected]


Related Articles

arrow_forward_ios
Walker Tower at 212 West 18th Street with in-contract buyer Ron Vinder (left), and prior owner Khadem al-Qubaisi (right) (Images from JDS Development, Morgan Stanley, Pixabay)

Walker Tower board fights “low-ball” sale of 1MDB-linked penthouse

Walker Tower board fights “low-ball” sale of 1MDB-linked penthouse
Jho Low, the Viceroy L’Ermitage

Viceroy L’Ermitage is latest Jho Low property feds look to unload

Viceroy L’Ermitage is latest Jho Low property feds look to unload
Walker Tower at 212 West 18th Street (Courtesy JDS, Core NYC)

Walker Tower condo board opposes heavily discounted sale of 1MBD unit

Walker Tower condo board opposes heavily discounted sale of 1MBD unit
102 Prince Street and Jho Low (Credit: Modlin Group; Low by Michael Loccisano/Getty Images for New York Times)

Jho Low’s former Soho condo sells at a discount

Jho Low’s former Soho condo sells at a discount
Jared Kushner and Jho Low (Credit: Getty Images)

Netflix’s “Dirty Money” delves into Jared Kushner, 1MDB scandal

Netflix’s “Dirty Money” delves into Jared Kushner, 1MDB scandal
Jho Low and the Time Warner Center at 25 Columbus Circle (Credit: Getty Images)

Financier at center of 1MDB fraud case agrees to give up hundreds of millions of dollars

Financier at center of 1MDB fraud case agrees to give up hundreds of millions of dollars
Manhattan hotel at center of 1MDB fraud case lands $615M refinancing

Manhattan hotel at center of 1MDB fraud case lands $615M refinancing

Manhattan hotel at center of 1MDB fraud case lands $615M refinancing
Jho Low’s superyacht sells, marking largest recovery of funds from 1MDB scandal

Jho Low’s superyacht sells, marking largest recovery of funds from 1MDB scandal

Jho Low’s superyacht sells, marking largest recovery of funds from 1MDB scandal
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...