Fallout from LES realty flip
Buyer quits B’klyn deal
The company that riled City Hall by hushing up its purchase of a Lower East Side nursing home has pulled out of a major project under pressure from the administration, sources said Wednesday.
The Slate Property Group sold its interest in the Bedford-Union Armory in Crown Heights to its collaborator on the project, BFC Partners, just two weeks after Mayor de Blasio said he was taking a “hard look” at its role.
Slate and BFC in December were awarded a long-term lease to build 330 units of housing along with recreational and office space on the city-owned site.
But the mayor ordered a review after two investigations found that Slate officials had instructed subordinates to keep quiet about the firm’s interest in purchasing the decades-old Rivington House nursing home on the Lower East Side.
The seller, the Allure Group, at the time was still working to get the city to lift deed restrictions governing the use of the property.
“Guys, please make sure we do not discuss this deal with anyone on the outside right now,” Slate founder Matt Nussbaum wrote in an e-mail to 10 company officials in May 2015.
“The seller is very concerned that the city and [the nursinghome] union will find out that he is in contract to sell at the price that we are buying it, which will directly impact his ability to have the deed restriction removed,” the e-mail continued. “Once he has it removed, we can do whatever we want.”
The city lifted the deed restrictions in July 2015 for $16.1 million paid by Allure, and Slate and its partners purchased the property for $116 million in February.
Allure walked off with a $72 million profit.
The sale of the site for luxury housing was a major embarrassment for the mayor — who claimed he would have blocked the deal if he’d known about it.
The controversial sale sparked a slew of investigations, but Slate’s withdrawal is the first major repercussion.
“We believe this is the right decision,” City Hall spokesman Austin Finan said of Slate’s departure from the armory project.
“It protects the vital affordable housing coming to this site, and serves the needs of this community.”
Thus far, two of the probes of the nursing-home deal have found mismanagement and miscommunication at the highest levels of City Hall, but no wrongdoing.