Posted Dec 14, 2016, 1:09 AM
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New Yorker for life
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Join Date: Jul 2001
Location: Borough of Jersey
Posts: 51,900
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Quote:
Originally Posted by CityGuy87
Considering the fact that Extell is well into construction for this tower, will that be a factor in convincing banks to give them a construction loan? At this point in the development process, wouldn't it be a real pain in the ass for them to pause on construction only to resume later granted Extell is unable to obtain financing before their July 2017 deadline and would it even be possible to stall construction at this stage?
Also, didn't Extell say they were going to launch sales before the end of year? I guess even Gary Barnett is losing faith in the market now but who knows?
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Doubtful they will pause construction. We've seen some instances where that happened, Gehry's Beekman St tower Downtown is an example.
As far as sales, Barnett has said that would start by the end of the year. As far as a drop in the market, he has also said that it wouldn't be a problem because he doesn't need to get One57 level prices here.
http://ny.curbed.com/2016/8/11/12443...c-sales-update
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the One57 developer announced that sales for Central Park Tower will launch later this year. The move confirms that the 1,550-foot condo won’t be following the lead set by its neighbor at 111 West 57th Street, where sales were put off until next year amid a slowing market.
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https://www.bloomberg.com/news/artic...-s-bondholders
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Barnett acknowledged slowing demand for New York’s priciest apartments, but said the risk is mitigated for Israeli creditors because the Extell unit issuing the bonds is backed by a pool of diverse properties that also includes hotels, rentals and less-expensive condos. As for his upcoming luxury developments -- including Central Park Tower on West 57th St. -- Barnett said he acquired land for them years ago at favorable costs, which means he doesn’t need to sell condos at record prices in order to see a return.
“One of the things we’ve tried to make clear to the bond investors is that Extell Ltd. is not dependent on getting these super-high luxury prices,” Barnett said. “There are many ways of repaying the debt and we don’t anticipate we’ll have a problem.”
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http://therealdeal.com/2016/10/05/in...estate-tetris/
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Extell is in talks with several potential lenders for the $900 million construction loan — though Barnett declined to confirm any names, sources said the list includes JPMorgan Chase and the Korea Investment Corporation.
But the developer is in a serious time crunch. It has just three months to repay a $235 million land loan from Blackstone Group, which it secured in 2013. To repay the loan, Barnett is counting on securing the construction loan rather than going through a refinancing. If he’s unable to repay Blackstone by the deadline, the loan goes into a one-year standstill agreement, whereby the private equity giant can’t demand an immediate settlement until the latter part of 2017.
...if Barnett can’t close on a construction loan by July, SMI has what amounts to a real estate get out of jail free card: It can force Barnett to buy back its equity stake for roughly $300 million, plus interest. And if he can’t come up with the funds to buy SMI out by July 2018, it can push him to sell the whole project.
...Barnett believes he’s on solid footing. “It’s an extraordinarily low loan-to-value loan,” he said. “We’re going to be looking at less than $2,000 a foot [basis] for a construction loan and 220 [Vornado Realty Trust’s 220 Central Park South] is averaging [sale prices of] between $8,000 and $9,000 a foot.”
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Quote:
A possible source of funds, Israeli investors believe, is a sale or refinancing of Extell’s 555 10th Avenue. The 52-story, 478-unit luxury rental project will begin leasing in October and IBI forecasts its annual net operating income at $30 million.
When RXR reduced its mezzanine loan for the three Extell projects, it also restructured the deal so that Extell has greater financial flexibility on 555 10th. Extell may now sell or refinance its stake, which is valued at between $300 million and $400 million, based on a total asset valuation of between $700 million and $800 million, Saylan said.
Extell has already sold off other assets, including a site at 134 West 58th Street to Stanley Wasserman’s S.W. Management for $61.5 million and another at 12 West 48th Street to DNA Development for $37.2 million. It’s also looking to sell a site at 30-32 East 29th Street.
“If the economics make sense to sell, I’ll sell,” Barnett said. “If it makes sense to keep long-term, I’ll keep it. I like owning New York real estate long-term — but not if it’s stupid.”
But Barnett said he won’t necessarily move funds from these prospective sales into CPT. He has plenty of other projects, such as CityPoint in Brooklyn and a development site on East 86th Street, into which the money could go.
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https://www.bloomberg.com/news/artic...ash-at-a-price
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“By having another year and more resources to continue building, it potentially will be easier -- if they’re 20 stories out of the ground -- to convince banks to give a construction loan,” said Eisenberg, who analyzed Extell’s filings but doesn’t advise the firm.
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Last edited by NYguy; Dec 14, 2016 at 1:22 AM.
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The international luxury market (which is what made 57th street the billionaire's boulevard) attracts those VIP that are making an investment. This is not their primary residence.
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