Manhattan condo board disputes sale of 1MDB-linked penthouse, says price too low — WSJ

KUALA LUMPUR (July 17): The Walker Tower condominium board is disputing the sale of  a nearly 6,000 sq ft penthouse linked to 1Malaysia Development Bhd (1MDB) in Manhattan.

The Wall Street Journal (WSJ) in a report June 17 said that the penthouse which sold for US$50.9 million in 2014, went into contract for just US$18.25 million a few weeks earlier, citing people familiar with the situation.

The report said that now a battle was brewing over the property, which the U.S. Department of Justice is selling after seizing it as part of a civil forfeiture action related to the 1MDB corruption scandal.

It said that in an effort to block the sale from going through at such a low price, the Walker Tower condo board plans to exercise its right of first refusal, buying the condo itself for the same sum, then relisting it for more.

WSJ quoted David Berkey, an attorney for the condo board as saying that 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.

“The board is acting in the best interests of all Walker Tower owners by exercising its right of first refusal,” said Berkey.

The newspaper said in response to a request for comment, a Justice Department spokesman directed The Wall Street Journal to a prior pleading in the case, showing that the Walker Tower condo board had previously agreed that the government would have sole discretion to accept an undisclosed offer, or any other price within 25% of that offer.

The five-bedroom apartment has three wood-burning fireplaces, nearly 500 square feet of private terraces and 360-degree views of the Hudson River and the Statue of Liberty.

The report said the unit had been purchased in 2014 by an entity known as 212 West 18th Street LLC.

When the Justice Department moved to seize the condo, it alleged that the limited liability company was controlled by Abu Dhabi businessman Khadem Al Qubaisi and that he had purchased the unit with money illegally siphoned from 1MDB.

WSJ said the penthouse was most recently listed for US$35 million with Shaun Osher and Emily Beare of CORE, who did not immediately respond to a request for comment.

It added that Berkey said before the pandemic, several prospective buyers had bid on the unit, but those offers weren’t accepted by the Justice Department.

WSJ said the board’s move to exercise its right of first refusal is extremely rare in the New York real-estate world.

Several agents told The Wall Street Journal they didn’t recall a single instance of it in a luxury building in the past.

It said in New York, the right of first refusal is commonly written into a condominium’s bylaws to allow boards some control over who buys in the building and at what price. In the event that a board is unhappy with a deal, it has the option to buy the unit itself.

WSJ added that industry experts said the US$18.25 million price is below market value and Walker Tower is warranted in its concern.

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