The legal battle between Extell Development and the New York Institute of Technology is far from over. As previously reported, Extell Development had put down a $4.5 million deposit to purchase 1855 Broadway from NYIT in 2019 for $90 million. Extell planned this purchase as part of an expansion, and NYIT planned to use the funds from the purchase to invest in its main campus in Old Westbury, Long Island, but these plans changed after the pandemic, and they have not completed the sale to Extell.
Due to this change in plans, Extell has abandoned its plans to expand in the area, and has now leased its space at 17 West 60th Street for $49.5 million. The 99-year lease to The Shefa School, a Jewish based school helping students with language based learning disabilities, has allowed the school to expand its operations and relocate the Upper West Side.
The Shefa School plans to build out the space with $65.7 million in “mostly tax-exempt bonds provided by the city’s Build NYC program, which provides funds to nonprofits to make real estate investments, according to property records,” reports Commercial Observer.
Extell is waiting for its day in court to recover the $4.5 million deposit the developer gave to NYIT for the purchase of 1855 Broadway. In the lawsuit, Extell states that NYIT is involved in a “bad-faith scheme” so that they can keep the deposit. The Real Deal reports that “The terms of the purchase contract, which the parties signed in September 2019, gave the university until October 2020 to terminate the sale without penalty. In that case, Extell would receive its initial $4.5 million deposit back. If the transaction was still moving ahead by fall 2020, Extell would pay NYIT an additional $9 million and the sale of the vacant campus would close between May 2021 and June 2022.”
According to the lawsuit, NYIT did not communicate with Extell about its change in plans, but rather, the “university told the developer it was waiving its rights to terminate the contract and expected Extell to pay the additional $9 million deposit.” Extell believes NYIT knew they were not going to move forward and planned to keep the deposit and is setting them up to owe the rest of the funds.
NYIT’s lawyer responded saying that Extell chose to “preemptively declare that it was free not to perform under the terms of the contract” and “That was a risk that [Extell] took.”
The case will be heard in court in September.