Extell Development’s Lower East Side Project Misses Another Financing Deadline
Developer Gary Barnett seems to be having some troubling pulling together the financing for One Manhattan Square, his 80-story mega-tower in the Two Bridges neighborhood. Here’s the story from Bloomberg:
Extell is hoping to complete a $463.2 million financing agreement with office landlord RXR Realty LLC to build One Manhattan Square on South Street, but that partnership was postponed for a fourth time Monday. The company still hasn’t secured a construction loan for the project, which is a condition of the deal, according to filings on the Tel Aviv Stock Exchange, where the New York-based developer sells debt.
The project, now under construction at 250 South St., is set to include 815 luxury condos. RXR has now cut its initial commitment to $300 million. It will decide later on whether to kick in another $163 million. The firm will also charge 8% interest, up from 7%.
Extell has been trying to lock in a $550 million construction loan with Deutsche Bank AG and other financial entities by the end of this month. Here’s Bloomberg’s assessment of the situation:
Extell, which ushered in Manhattan’s luxury condo boom with the construction of the One57 skyscraper across from Carnegie Hall, is now getting caught up in its aftermath. The luxury market is showing signs of a slowdown as inventory swells and interest from ultra-wealthy buyers cools amid so much competition. That has made construction loans increasingly hard to get, as lenders are wary of adding more units to a market where they do not appear to be in demand.
More from the Real Deal:
“RXR’s decision is creating a bigger hole for Extell, but it also reduces Extell’s total exposure,” Ori Eisenberg of real estate financial advisory firm One Ha’am told TRD. TheMarker and Israeli daily newspaper Calcalist reported first on Extell’s announcement. Following the announcement, TheMarker reported that bondholders were unhappy and disappointed. The bondholders held an urgent meeting Monday night to clarify the financing situation. “This shows just how challenging it is for even a leading developer to secure sizable financing,” Eisenberg said. “Loans of more than $100 million in New York are increasingly rare.”
The Extell tower is one of four gigantic projects in the works in the Two Bridges neighborhood. In total, more than 2,000 new apartments and close to two million square feet of new residential development are planned along the waterfront on the Lower East Side.