I'm too excited!
Singapore Investors Back New York Tower
The $1.3 Billion Project Contains Space for Museum of Modern Art
By Craig Karmin
Oct. 29, 2013
A prominent Singapore real estate family backed by a group of Asian banks is providing more than $1 billion to revive plans to build one of Manhattan's tallest skyscrapers and new gallery space for the Museum of Modern Art.
The billionaire Kwee family, which controls property developer Pontiac Land Group, is making an equity investment of about $300 million in the metal and glass tower designed by French architect Jean Nouvel, according to people briefed on the deal.
Singapore's United Overseas Bank Ltd. and other lenders are also providing $860 million in construction loans for the project, these people said.
The total cost for the 72-story building that will rise next to the current MoMA building in midtown Manhattan is about a $1.3 billion, say people familiar with the project, which would make it one of the most expensive buildings in the country. The developer, Houston-based real estate firm Hines, confirmed the deal with the Kwee family and Asian banks but declined to disclose details.
The new financial commitments revive one of New York's most discussed real-estate projects, which drew both critical acclaim and howls of protests from some neighbors when it was unveiled in 2007. Progress slowed during the recession and its aftermath when financing for such big projects dried up. The Hines tower would include the biggest expansion for MoMA in a number of years, with 36,000 square feet of additional gallery space on the museum's second, fourth and fifth floors. The building also will feature 145 luxury condominiums.
"We have long admired MoMA's contribution to the city and the world, and we are pleased that this project will expand their galleries," Kwee Liong Tek, a director of Pontiac Land Group, said in a statement. Hines and its partner Goldman Sachs Group Inc. also are making equity investments. Construction is expected to begin next year on the 1,050-foot-tall building on vacant land adjacent to the museum.
The new investment shows how some of New York's flashiest and most expensive developments that slowed to a crawl during the recession are back, as the economy stabilizes and as more investors pump money into high-end real estate. Earlier this year, New York developer Larry Silverstein received $930 million in financing led by the Children's Investment Fund Management, a U.K.-based investor, which is enabling Mr. Silverstein to restart an 82-story Four Seasons Hotel and private residences downtown. Luxury residential projects in Tribeca and near the United Nations also have sprung back to life after sitting idle for years. These comebacks are arriving sooner than expected. After the recession of the early 1990s, stalled projects took a decade or more to revive, or never returned at all, says Mark Edelstein, a real estate attorney at Morrison & Foerster. This time, he says, less supply of new buildings, capital now available at attractive rates and surging foreign interest has breathed fresh life into several developments that were on hold. "It's pretty remarkable really," he says.
The deal also marks the biggest bet yet on the U.S. market by the Kwee family, which owns and operates many Asian hotels and is one of Singapore's biggest landlords. The family has a net worth of $3.9 billion, according to Forbes magazine.
Initially dubbed Tower Verre by Mr. Nouvel's office, the Hines building is the latest entrant into Manhattan's luxury condo sweepstakes. Two other midtown residential buildings that will rise more than 1,000 feet, One57 and 432 Park, already have contracts for top-level apartments at more than $90 million. Several other luxury condo projects are under way with units that have eight-figure asking prices.
MoMA sold the 18,000-square-foot lot to Hines and Goldman Sachs in early 2007. It initially was approved for a more modest 25-story building, but Hines was able to acquire air rights from some of the surrounding buildings. Mr. Nouvel proposed a 1,250-foot tall skyscraper.
The tower's design tapers as it reaches to the sky, and early plans included the possibility of a hotel along with the apartments. But the economic downturn caused momentum to grind to nearly a halt.
At the same time, Hines was defending against neighborhood complaints. A tall building on a relatively small space drew scorn from some on the block and preservationist groups. The Historic Districts Council, an independent organization that lobbies on behalf of community groups, wrote on its website that "Tower Verre would be one of the tallest buildings in Manhattan on a lot barely the size of a McDonald's franchise." The city in 2009 told Hines to reduce the size of the tower by 200 feet. Mr. Nouvel came back with a new, shorter version that won city approval, but it has been confined to the drawing board while Hines tried to secure financing.
Talks with the Kwee family and Asian banks began last year, and the two sides reached an agreement in the spring before closing on the deal in recent days.
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