Rushmore buyers offered deals to stem mass defections, sources say
October 23, 2009 06:30PM By David Jones
Gary Barnett, the Rushmore
The sponsors of Extell Development's Rushmore condominium have quietly begun offering sales discounts of up to 25 percent in a campaign to retain at least some of the 30-plus buyers looking to back out of their contracts, according to multiple sources.
A group of at least 34 buyers filed complaints with Attorney General Andrew Cuomo's office, looking to get out of their contracts. And sources said that representatives of the Carlyle Group, which is Extell's partner in the Rushmore, at 80 Riverside Boulevard, have contacted individual members of the group regarding discounts. Carlyle officials were not immediately available for comment, but Gary Barnett, Extell's president, denied that any discounts were being offered.
"It's not true," said Barnett, in an e-mailed statement to The Real Deal. "These rumors are being spread by an attorney with an axe to grind."
Barnett did not elaborate on which attorney he was referring to, or how he knew about any specific claims.
Attorney Richard Cohen, who represents the group of 34 Rushmore buyers, confirmed that one buyer dropped out of the group in recent days and one other buyer previously left the group.
"Our assumption is they were offered a discount," said Cohen. "We don't think they would otherwise leave the group."
As The Real Deal reported earlier this month, a JPMorgan Chase executive filed suit against the sponsors, looking to back out of a $6.9 million contract for two apartments.
Prices in the building range from $925,000 for a 775-square-foot one-bedroom to $13.25 million for a 7,200-square-foot, eight-bedroom penthouse. The penthouse price includes a $1 million discount from the original asking price, according to Streeteasy.com.
Extell has been scrambling to close sales at the 289-unit building. The company, which developed the Rushmore with financial backing from the Carlyle Group, began signing contacts in 2007 and was originally scheduled to begin closings by September 2008.
According to published reports, the September 2008 date was an error made by attorneys for the sponsor, and the actual closing date was not supposed to be until September 2009.
Real estate attorney Lisa Urban said a couple she originally represented in its Rushmore deals, is part of the group of buyers trying to get out of their contracts. She cited construction delays and the collapse in the real estate market as the main reasons for her clients wanting to get out of their deals.
"For my particular clients it was market issues more than anything else," Urban recalled. "It took so long to complete the project at that point."
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Comments
Anonymous
I think this is a beautiful building, whatever the economy,whatever the lack of sales!
Comment #1 Posted By: Anonymous 10/23/09
Anonymous
It's a beautiful building worth about $1,000 per square foot.
Comment #2 Posted By: Anonymous 10/24/09
Anonymous
I recently visited the Rushmore. The apartments were finished nicely but the ceilings weren't high and the heating/cooling units blocked what could have been dramatic floor to ceiling views. The amenities were nice but not much better than other new builds I have visited. Its a good building but not spectacular. I am not sure why anyone would pay up for it given all of the uncertainty it has.
Comment #3 Posted By: Anonymous 10/24/09
Anonymous
I totally agree with comment #3. This bldg is so overrated. I looked at an apt in the G line, 2 bedrooms, and I felt clautrophobic.
Comment #4 Posted By: Anonymous 10/24/09
Anonymous
The Rushmore will be the nicest rental building on RSB !!!
Comment #5 Posted By: Anonymous 10/24/09
Anonymous
Hey, Gary Barnett, congratulations for being the first poster.
Comment #6 Posted By: Anonymous 10/24/09
Anonymous
Seriously these broker shills posting about how great this building is are starting to become ridiculous. If it is so great why is it only 25% closed with buyers fleeing like its the Titanic?
Comment #7 Posted By: Anonymous 10/24/09
Anonymous
ummm #7 maybe because the building is ony partially complete inside and many floors aren't ready for delivery ? just a guess mind you. Those complaints were filed awhile ago, sounds like the lawyer is trying to get some momentum going so he gets paid; he is probably worried about the vialbility of his lawsuit since the Brompton lawsuit turned out to be a complete debacle for the buyers, at least according to the NY Times Reale Estate section yesterday.
Comment #8 Posted By: Anonymous 10/26/09
Anonymous
So Mr. Cohen assumed that they were offered discounts ? We all know aht happens when you assume , u make an ass out of u and me. Sounds like the kind of lawyer I want on my side
Comment #9 Posted By: Anonymous 10/26/09
Anonymous
Commenter #8. Almost every unit is ready for delivery and less that 20% have closed so this building is really struggling. Other than the lawsuit filed by the JPM executive I don't think lawsuits have been filed for the other buyers. I think it is a filing with the AG office saying the Extell did not comply with the first occupancy deadline which entitled buyers to rescind their contracts and have their deposits return.
Comment #10 Posted By: Anonymous 10/26/09
Anonymous
#9: Cohen's statement about his assumption as to why some buyers have left his group is completely meaningless to the case. Nice try at trying to disparage his qualifications. I'm guessing you have a vested interest in seeing as few people purse their legitimate grievances with Extell as possible - me thinks you are a broker or affiliated with Extell !!!!!
Comment #11 Posted By: Anonymous 10/26/09
Anonymous
The NYT article seemed to say the developer offered major price concessions to many of the Brompton buyers (which were pursuing a completely unrelated arguement to the Rushmore buyers). Not sure how anyone thinks major price concessions were a "complete debacle for the buyers." Ohh...these Extell affiliated posters are so obvious.
Comment #12 Posted By: Anonymous 10/26/09
Anonymous
#12 You need to go back and read the article in its entirety. Here is the pertinent part. "The dispute at the Brompton has become unusually acrimonious. Ms. Rose said that Mr. Bailey had exaggerated the number of clients he had, and that out of 12 clients, 5 closed at “full contract price,” 4 surrendered their deposits, and 3 were still fighting the developer." 5 closed at full contract price and 4 lost their deposits, in other words 75% of this one group lost completely. That is not a good win/loss record. By your logic I would imagine you are a para-legal in Mr. Bailey's or Mr Cohen's law firm ?
Comment #13 Posted By: Anonymous 10/26/09
Anonymous
#13: If Rose is right you are correct and the Brompton case looks like a loser. Rose's statement seem a little bit at odds with other statements in the article about concessions (although hard to know given any concessions include buyer signing a confidentiality agreement).
Comment #14 Posted By: Anonymous 10/26/09
Anonymous
Easily proven by a review of the court papers which would include those settling out of the case.
Comment #15 Posted By: Anonymous 10/27/09
Anonymous
What does Brompton have to do with this? They are completely different cases. One criminal gets off so all criminals should be let go? Nice logical extension there...
Comment #16 Posted By: Anonymous 10/27/09
Anonymous
Anyone can go to ACRIS and find that people who closed at the Rushmore got discounts to schedule A prices. PLUS - Extell is offering "off deed" kick-backs if you will to entice people to buy/close that won't be reflected in the deed value on ACRIS. He seems to think multi-million dollar apartment buyers are stupid and don't know things like that are happening. If I were a buyer, I would definitely not take the off-deed offer and demand all of my discounts are reflected in the purchase price. why? b/c taxes are calculated off the purchase price!!
Comment #17 Posted By: Anonymous 10/27/09
Anonymous
Well, according to the sales office, there have been close to 80 closings. According to streeteasy, the number is less, but it takes them some time to catch up. Streeteasy lists 60+ in contract. That still leaves about half the units unsold. There may be additional contracts out there, but even if there are a dozen, even if they all did, it would still leave about half units unsold. If they close about 10 a month, it will take about a year before 80% are closed. Not good. Streeteasy's listed closings also show pretty deals worth hundreds of thousands of dollars in discounts are being made, so perhaps more units will be sold at a faster pace. But even with lowered prices, deals have to get passed the lawyers, and Extell's lawyers tend to be arrogant and, in light of the A/G suit, appear to be in a circle the wagons mode, and Barnett is letting them behave this way. Strange.
Comment #18 Posted By: Anonymous 11/13/09