The Real Deal New York

How Beninati’s gamble to build a supertall and a legacy failed

3 Sutton Place on the brink of foreclosure

March 14, 2016 12:52PM

From left: Joseph Beninati and a rendering of 3 Sutton Place

From left: Joseph Beninati and a rendering of 3 Sutton Place

Fortune favors the bold — that’s what Joseph Beninati of Bauhouse Group was hoping with his plan to turn a trio of six-story building lots into a supertall luxury tower in Midtown.

The 68-story, Sir Norman Foster-designed condominium project was to catapult relative newcomer Beninati into the same pantheon as Gary Barnett, the Zeckendorfs and Harry Macklowe. Instead, the site for the project, known as 3 Sutton Place, at 428-432 East 58th Street is near foreclosure.

“How many times in your life do you get to build a 1,000-foot-tall building in Manhattan?” Beninati told Crain’s. “You might get up to bat twice in your whole life for something like this. There are guys who go 20 years and have major-league careers and never get up to bat in the World Series. It just doesn’t work out.”

After purchasing the buildings in January 2015, Beninati needed financing for the planned supertall. He rejected offers from DDG and CIM Group, a Los Angeles-based investment fund, to partner to build the tower, Crain’s reported. Instead, he borrowed more than $147 million from Richard Kalikow’s Gamma Real Estate.

The majority of the loan — around $120 million — was used to financing the purchase of the site, paying tenants to vacate, design and development costs as well as 144,212 square feet of air rights for the tower’s height, Crain’s reported.

A handful of unnamed sources told Crain’s that Gamma likely wanted Beninati to take such a high debt load so it could control the property when he foreclosed.

By January, Beninati defaulted on the loan and the march toward foreclosure began. Gamma was to put the site up for auction at the end of February, but the developer held off by filing bankruptcy for BH Sutton Mezz LLC. The legal battle over the site will last for months, Crain’s reported, and Beninati wouldn’t comment on it to the publication. [Crain’s]Dusica Sue Malesevic

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