Lois Weiss
BETWEEN THE BRICKS
Gary Barnett is busy shedding unwanted assets and amassing capital as he concentrates on skyscrapers such as the 1,550-foot Nordstrom tower on West 57th Street that will be the tallest US residential building.
Yesterday, Extell founder Barnett and partner the Carlyle Group sold the Building 2 site at the Riverside Center development to the Dermot Cos. and AFL-CIO Building Investment Trust.
The $420 million development, which calls for residential rentals, retail space and a grade school, has a $275 million state Housing Finance Agency bond mortgage with credit enhancements through Bank of America and Capital One.
Documents show the site sold for $70 million, but the equivalent land cost would be closer to $100 million as the developers have the added costs of building a school.
After the building’s construction company, Tishman Construction, finishes the core and shell, the 112,440-square-foot school condominium will be turned over to the School Construction Authority, which will complete the interior.
As we first told you in September 2011, the complicated site was marketed by Andrew Scandalios of HFF, who is also marketing the neighboring site 5 for another residential building.
When developed, the 640,000-square-foot Building 2 at the southwest corner of West 61st Street will be known as 21 West End Ave.
“We think we paid a fair price and the overall costs make this an excellent opportunity for us,” said Dermot COO Stephen Benjamin, who declined to discuss pricing.
Of the 616 apartments, 127 will be set aside under the 80/20 program for lower-income housing.
The community was unhappy that Dermot swapped the master plan starchitect, Christian de Portzamparc, for SLCE Architects, which has reacted to the criticism with a more interesting scheme.
“It’s still a work in progress,” Benjamin said. The new rendering enlivens all the façades, especially those of the kindergarten to 8th grade school, and makes other tweaks.
The main building’s interiors are being designed by ICRAVE, which is also coming up with amenities, including a wine bar, playroom, hobby room, swimming pool, lighted waterfall and dog salon.
“It will be a really fun, cutting-edge amenity program as they come from a hospitality, restaurant and club background,” said Benjamin. “It will be more like a hotel but fun residences.”
The building will also have 23,725 square feet of street retail space on all four sides for between five and seven retailers.
This week, Barnett is also closing the sale of the Westbourne apartment complex on West 137th Street to Bonjour Equities for $66 million.
The five multifamily buildings have 182 apartments with addresses from 601 to 611 W. 137th St. A Duane Reade store inhabits the retail along 99 feet of Broadway frontage.
Investment sales broker Georgia J. Malone of Georgia Malone & Co. represented Extell and was the sole broker.
In October, Extell sold the leasehold on 175 Varick St. for $32.75 million to WeWork and AEW Capital Management. That deal was marketed by Jones Lang LaSalle’s “Fearless Foursome” team of Richard Baxter, Ron Cohen, Scott Latham and Jon Caplan.
Yet another brokerage, Massey Knakal, is now marketing a garage for Barnett that can be redeveloped to 270,000 square feet and could sell for around $85 million. This site runs mid-block from West 24th to West 25th streets between Sixth and Seventh avenues.
“There are several people looking at it,” Robert Knakal said.
For Barnett, Knakal is also marketing 736 Broadway, a small IMD residential and retail building near Astor Place that will likely sell for around $10 million.
Knakal said his company has 59 buildings and is closing this month with 27 sold just by him.
“This is the best month in my career,” he said, adding that he’d already put off his vacation to next year to oversee the closings.
Meanwhile, Barnett and Carlyle’s effort to appeal an order from the New York State Attorney General to refund $16 million in deposits to 40 condo buyers at the Rushmore was cast another blow on Dec. 11, when the state’s Appellate Division rejected the developers’ argument that the early closing date in the condo documents was a scrivener’s error.
Barnett is also having cash flow issues at the 215-unit apartment building the Belnord, where a $50 million reserve fund that was tapped to meet a $20 million-plus yearly shortfall was exhausted. The $375 million loan is delinquent, according to Fitch Ratings and Morningstar Credit.
Barnett has said they are in discussions with the servicer and “hope to resolve this amicably.”
Barnett is also suing at least one tenant for several hundred thousand dollars in back rent, court records show. Barnett did not return a request for comment.
Lois@BetweentheBricks.com
