The Real Deal New York

Extell further delays closing $463M in RXR financing

Bonds backed by One Manhattan Square, other assets drop 3%

June 27, 2016 05:15PM
By Mark Maurer

Gary-Barnett-250-South-Street-Scott-Rechler

Gary Barnett (credit: Adam Pincus), One Manhattan Square and Scott Rechler (credit: Chris Martin)

Extell Development has once again delayed its closing of $463 million in mezzanine financing from RXR Realty for One Manhattan Square and two other New York City projects.

After the developer reported Sunday to the Tel Aviv Stock Exchange that it will fail to meet its already extended deadline of June 30, Israeli bonds backed by Extell’s U.S. real estate assets fell by 3 percent.  On May 19, Extell pushed back the loan the first time, until June 30. Extell is now set to close on the RXR financing July 30.

Separately, Deutsche Bank provided a three-month extension for a $150 million bridge loan it was supposed to repay June 30.

Sources said RXR is shopping the loan around to other alternative lenders in NYC and trying to tranche its position. RXR’s agreement from March came with several conditions among, sources said: Extell had to close on a senior construction loan for One Manhattan Square before receiving the RXR funds. Since Extell is having issues with closing on the funds from One Manhattan Square, its loan from RXR is both delayed and restructured, sources said.

Extell’s two bond series both currently trade at yields of around 13.5 percent, indicating that Israeli investors perceive the firm’s luxury development exposure as high risk.

Extell plans to continue to seek alternative financing for the existing loans on One Manhattan Square.

Israeli business daily Calcalist first reported the news.

Representatives for Extell could not be reached for comment.

Sources attribute the delays in repayment, in part, to Extell not securing as much in proceeds toward construction financing as it had hoped. The Gary Barnett-led firm was seeking $890 million in financing, including up to $200 million through the EB-5 visa program.

The proposed 80-story, 815-unit condominium tower One Manhattan Square at 252 South Street is expected to cost $1.3 billion and wrap up construction by June 2018.

In addition to One Manhattan Square, RXR is also serving as a lender on Extell’s 500 East 14th Street and 555 10th Avenue. Of the $463 million in loans from RXR, $394 million is set to go toward both One Manhattan Square and 555 10th Avenue. The remainder, $69 million, will go toward 500 East 14th Street.

Correction: A previous version of this story incorrectly identified the lender of the $150 million bridge loan. It is Deutsche Bank. 

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