Controversial Nursing Home Operator Buys SUNY Downstate Medical Center in Bay Ridge for $160M - The Jewish Voice
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Thursday, August 18, 2022

Controversial Nursing Home Operator Buys SUNY Downstate Medical Center in Bay Ridge for $160M

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Controversial Nursing Home Operator Buys SUNY Downstate Medical Center in Bay Ridge for $160M

Edited by: TJVNews.com

In the world of New York City real estate deals, history has taught us that anything can happen at any time, and nothing is beyond impossible.

It was recently reported in The Real Deal that a mammoth deal that was once on life support has now been revived in a big way.

Public records reveal that the Allure Group, a controversial nursing home operator just plunked down $160 million for the SUNY Downstate Medical Center in the Bay Ridge section of Brooklyn. The Real Deal reported that Allure owns the adjacent property at 691 92nd Street, which it acquired in 2010 for $20 million and operates as a nursing home.

In 2016, the Jewish Voice reported that the city of New York had lifted deed restrictions on Rivington House, a lower east side nursing facility that focused on the care of AIDS patients, which was owned by the Allure Group.  Allure, a for-profit nursing care provider walked off with a $72 million pay day after they sold it to real estate developers for the purpose of building luxury condominiums at the site.

According to published reports at the time, the Allure Group, which was operated by Solomon Rubin, a Hassidic businessman who is connected with the Bobov sect had close ties to former New York City Mayor Bill DeBlasio. For his part, DeBlasio said at the time that his administration was “misled” by the company that owns a string of nursing homes around the New York metropolitan area.

This led to a settlement with the state attorney general, as was reported by the Real Deal.

Providing the $122 million acquisition loan for the SUNY Downstate deal was Webster Bank, formerly known as Sterling National, the report indicated.

Webster Bank, formerly Sterling National, provided a $122 million acquisition loan.

This massive deal, however, almost never came to fruition as a result of a disputation between the seller and buyer, according to deed records as well as records from the court involved in the matter.

The Real Deal reported that the seller was the Leser Group, owned by Abraham Leser and the intermediate purchaser was Pearl Schwartz. The report indicated that Schwartz is a dealer with a low profile in the real estate industry and not known by many. Based on court records, Schwartz flipped the contract to the Allure Group, who were clearly interested in the property. The Pearl Schwartz firm walked off with a $7 million profit in the deal.

Flipping a sales contract to a buyer at a higher price, as Schwartz did, can risk embarrassing the seller for leaving money on the table as well as for dismissing the fiduciary obligation to close on the sale, the Real Deal reported.

Speaking to the Real Deal Abraham Leser said: “I didn’t think Allure was going to pay that kind of price.  And I don’t think Allure believed I was really going to sell.”

Despite earlier having tried to cancel the transaction and keep Schwartz’s $3 million deposit when the sale failed to close by a deadline that was set for March, Leser told the Real Deal that, “It’s done and I got what I wanted.

The report indicated that in May of this year, the Schwartz firm filed a lawsuit against the Leser Group, claiming that the deal was not concluded due to work that was not completed on the building’s sprinkler system.

Court filings indicate that the proceeds of the deal were to be used by the Leser Group to meet its $70 million in obligations to its bondholders. This did not transpire as the deadline was not met.

The Real Deal reported that in December of 2021, Schwartz had entered an agreement to purchase SUNY Downstate for $153 million from the Leser Group. Schwartz then filed for bankruptcy protection three weeks later in order to protect his right to purchase the hospital at that price.

– In 2016, the Jewish Voice reported that the city of New York had lifted deed restrictions on Rivington House, a lower east side nursing facility that focused on the care of AIDS patients, which was owned by the Allure Group. Allure, a for-profit nursing care provider walked off with a $72 million pay day after they sold it to real estate developers for the purpose of building luxury condominiums at the site. Photo Credit: comptroller.nyc.gov

In the bankruptcy filings, Schwartz had said that funding had not materialized and that she needed  “new financing to pay off the $3 million note and avoid forfeiture,” as was reported by the Real Deal.

In court proceedings, attorneys representing the Leser Group countered with: “Schwartz used Chapter 11 to field other offers.” The Real Deal reported that the lawyers for the Leser Group also asserted that Schwartz secured a contract in February to “re-sell” the hospital for $160 million to the Allure Group.

The filings in the bankruptcy court in Brooklyn revealed that Marvin Rubin, principal of Allure Group, saw a $128 million commitment from Dwight Mortgage Trust dissipate.

The Leser Group stated that, “This commitment apparently did not come to fruition and Rubin has sought out other financing, which was certainly not finalized by March,” according to the Real Deal report.

A representative of SUNY told the Real Deal that, “The sale of the Bay Ridge building has no impact on Downstate operations at the site.”

 

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