Sloan-Kettering Drops $83.1 M. on Old Cabrini Buildings; Stalking Horse Demchick’s $3 M. Payday
Dana Rubinstein Jan. 29, 2010, 3:30 p.m.
Memorial Sloan-Kettering Cancer Center has emerged triumphant in an auction for five buildings that once housed the now defunct Cabrini Medical Center, according to a source familiar with the transaction.
Sloan-Kettering dropped $83.1 million on the buildings, totaling 450,000 square feet and bounded by East 19th and 20th streets, Second and Third avenues. Earlier this week, prior to the auction, Crain’s New York reported that Sloan-Kettering was planning to enter the competition.
Sloan-Kettering ultimately succeeded in out-bidding developer Jules Demchick, who was the auction’s so-called stalking horse bidder. In essence, Mr. Demchick signed a contract with Cabrini, before it declared bankruptcy, promising to bid about $80 million on the buildings in a bankruptcy auction. If Mr. Demchick were outbid at the auction, where bids rose in minimum increments of $100,000, he would still get a stalking horse fee for his effort. Further, Mr. Demchick couldn’t lose the auction unless he was outbid by at least $3 million. And so he was. The result: $3 million of Sloan-Kettering’s bid will now go to Mr. Demchick, which is not a bad pay day for doing, essentially, nothing.
None of the parties involved, including Sloan-Kettering, would comment. Their reticence may be due to the fact that a bankruptcy judge must first give the auction’s outcome an official stamp of approval, which is expected to happen next week.