The board of a major New York luxury building is fighting to stop the Justice Department from selling off its penthouse at a major discount.
The Justice Department has been trying to sell the penthouse of Manhattan’s Walker Tower in the trendy and uber-expensive Chelsea neighborhood, the Wall Street Journal reported. Purchased in 2014 for $50.9 million by an LLC linked to Abu Dhabi businessman Khadem Al Qubaisi, the nearly 6,000-square-foot unit was seized amid the 1MBD scandal — a 2015 corruption scandal in which the then-prime minister of Malaysia was accused of channeling money from a government company to high-level officials and for personal use.
After seizing the apartment on allegations that it was purchased with money stolen from the 1MBD fund, the Justice Department has been trying to sell it off. It went into contract last week for $18.25 million.
But the building’s board has argued that such a low price would hurt the high-end building’s property values and, according to the Wall Street Journal, it plans to exercise its right of first refusal by buying the condo for that price and then listing it for higher.
“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,” David Berkey, an attorney representing the condo board, told the Journal. “The board is acting in the best interests of all Walker Tower owners by exercising its right of first refusal.”
The apartment, which has five bedrooms and over 500 square feet of terrace space alone, was last listed for $35 million with Shaun Osher and Emily Beare of CORE. It is not immediately clear how the Justice Department settled on the $18.25 million price. Berkey said that, while the condo unit is collaborating with the need to recover property purchased illegally, the price settled on is far too low. According to him, several prospective buyers bid on the property before the COVID pandemic but their offers were not taken up by the Justice Department.
When asked by the Journal, the Justice Department pointed out an earlier pledge showing that the building board gave them sole discretion to find a buyer and accept an offer.
It is not typical for a condo board to exercise right of first refusal, a legal principle meant to give the owner first priority for buying the property on the same conditions. But residents have argued that the step is necessary to prevent the low sale from affecting property values for years to come.
“We’re all scratching our heads saying, “How did this happen?'” Vicky Barron, a Compass agent who also lives in the building, told the Journal. “What we’re talking about is almost 70 percent discount. It’s almost like a sample sale. Walker Tower is not a sample sale.”