| NYguy |
Jan 17, 2019 6:00 PM |
https://www.wsj.com/articles/the-man...do-11547739897
The Man Behind Billionaire’s Row Battles to Sell the World’s Tallest Condo
Extell’s Gary Barnett remade Manhattan’s skyline and spurred a supertall-tower boom with One57. In a faltering real-estate market, he’s hoping to sell the ultra-rich on Central Park Tower
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By Katherine Clarke and Candace Taylor
Jan. 17, 2019
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Gary Barnett was sitting in his Manhattan office one morning in the fall when his old-fashioned flip phone started to buzz. On the line was a real-estate agent who was marketing the New York developer’s latest condo project, a soaring 1,550-foot tall building known as Central Park Tower. With a total projected sellout of more than $4 billion, the skyscraper is the country’s priciest-ever condominium project and, when complete, will be the tallest residential building in the world.
The agent had bad news. Mr. Barnett had agreed to reduce a condo’s asking price, but now the client refused to sign a non-disclosure agreement concealing the details of the deal. Mr. Barnett’s response: Turn him away. “If we’re going to give someone a special deal, we don’t want them saying it all over the market,” he said.
This is a harsh new reality for Mr. Barnett, who has made a fortune fulfilling the real-estate dreams of the world’s elite. The Extell Development Co. founder kicked off the U.S. condo boom with One57, the first of the supertall towers that line the 57th Street corridor now known as Billionaire’s Row. The building’s penthouse sold for $100.5 million in 2014 to tech mogul Michael Dell, the record high for New York City.
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His success opened the door for other high-end towers across the city, permanently altering the Manhattan skyline. “The frenzy around One57 gave everyone the idea that this was a market that was ripe to be harvested,” said real-estate appraiser Jonathan Miller.
Central Park Tower is by some measures more audacious than anything that’s preceded it. The supertall skyscraper will feature panoramic views of the city and offer amenities like indoor and outdoor swimming pools, a 1,000-foot-high private club and a basketball court. Of the building’s 179 units, no fewer than 18 are priced above $60 million.
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Mr. Barnett is pulling out all the stops. In a newly opened sales office at Central Park Tower, potential buyers sip Champagne and Johnnie Walker Black Label amid a onyx-clad walls and Lalique crystal chandelier. In a dimly lighted room with 14-foot ceilings, strains of Gershwin’s “Rhapsody in Blue” fill the air as New York City landmarks are projected on the walls—Yankee Stadium, the Statue of Liberty, the Empire State Building. “Is there any place that has symbolized individual success and collective ambition as boldly as New York?” booms the voiceover, describing Central Park Tower as “1,550 feet of steel, ambition and aspiration anchored to 40,000 square feet of Manhattan schist...a shimmering beacon of class, optimism and chutzpah.”
Central Park Tower has already overcome some hurdles. When real-estate company Vornado Realty Trust started planning a competing condo two blocks north, Mr. Barnett stalled the project by taking control of a parking garage on Vornado’s property in addition to other property and air rights it owned on the block. Then Mr. Barnett refused to let Vornado tear down the parking garage to make way for its tower. The dispute was eventually resolved in 2013 when Vornado agreed to pay Extell $194 million for development rights on the block. As part of the settlement, both developers agreed to move their towers slightly so they both could have Central Park views.
Lining up financing for Central Park Tower was also a challenge, since banks have pulled back from financing ultra-luxury condos amid worries of oversupply. Mr. Barnett cobbled together debt from a public offering on the Israeli bond market and tapped the EB-5 program, which grants green cards to foreigners who invest in the U.S. He also brought on SMI USA, the U.S. subsidiary of the real estate investment firm Shanghai Municipal Investment, as a co-developer. Ultimately, Mr. Barnett began construction on Central Park Tower using Extell’s own funds before securing the money to finish it, an unusual move on such a large project. He had built more than 10 stories before J.P. Morgan Chase & Co. agreed to provide a $900 million construction loan. Now he must sell $500 million in apartments at Central Park Tower by December 2020 and pay down $300 million of his loan to J.P. Morgan Chase by the following year, according to information disclosed to Israeli bond investors, who have money in the project. If he fails to meet those deadlines, the bank can increase his interest payments.
Extell has many units to sell in addition to Central Park Tower, including One Manhattan Square on the Lower East Side, which has roughly 800 units.
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