Posted Oct 13, 2023, 3:37 PM
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Join Date: Jul 2001
Location: Borough of Jersey
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Extell unloads Midtown development site at apparent loss
Gary Barnett’s firm appears to take sizable haircut at 1710 Broadway
By Orion Jones
October 9, 2023
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Gary Barnett is letting go of a development site in Midtown.
His Extell Development has agreed to sell 1710 Broadway, at the southeast corner of West 54th Street, for $173 million, records show. In 2017, Extell paid $268 million for it.
Riu Hotels and Resorts bought the site, PincusCo reported. A Riu spokesperson confirmed the sale.
Extell is working to get plans approved for a 54-story, 673-unit hotel to replace the six-story, 52,000-square-foot office building at the address, but the Department of Buildings has yet to sign off.
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Bad Boy Entertainment leased the entire building in 2004. Barnett’s assemblage includes 360,000 square feet of air rights obtained in 2016.
Extell owned about 82 percent of the property, and the transaction is expected to create $54 million in cash, according to regulatory filings with the Tel Aviv Stock Exchange, where Extell’s bonds trade. The price of the site works out to around $590 per buildable square foot.
Barnett’s firm had bought into the project in 2015, taking a 39 percent ownership stake, using proceeds from the sale of its Ring Portfolio. The developer, in partnership with C&K Properties, hoped to bring a 60-story, hotel-condominium building to the site. The year after the 2016 air rights deal, Extell acquired the deed for $268 million. It sought to sell the site in 2018, then refinanced it the following year with a $124 million loan.
That loan, from Israel’s JVP Partners at a rate of 4.5 percent over LIBOR, may have come due and helped motivate the building’s sale. The LIBOR interest rate, which underpins many financial contracts, has risen to nearly 6 percent from below 1 percent in 2021.
The sale to Riu may help Extell build a financial cushion while debt costs remain elevated and the Federal Reserve signals that it might keep interest rates up for a while yet. Prior to the sale, Extell told bondholders it valued the Midtown site at $193 million, or $20 million more than the eventual price.
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