Despite evidence of an improved real estate market in Manhattan, one of the city’s most prominent builders, Extell Development, last week lost a major West Side development site it assembled for at least $44 million to its lender, likely the first time ever the company has lost a property through a deed in lieu of foreclosure.
Gary Barnett’s Extell gave up the parcel near Hudson Yards at 356-366 10th Avenue, priced just over the first mortgage value of $28.8 million, to its lender Barclays Capital Real Estate after an unidentified European partner refused to keep funding the project, Barnett told The Real Deal.
“We were supporting it for quite a while and we had a partner who did not want to do that any longer, so we gave it back,” Barnett, the company’s president, said.
Extell turned over the site, between 30th and 31st streets, to Barclays Aug. 11, city property records show.
Barnett said he believed it was the first time his company, founded in 1994, had ever returned a parcel to a lender in a deed-in-lieu. The loss of the property indicates that even with more activity in the commercial market, there are still significant hurdles for developers.
The project “wasn’t viable in today’s market. It was too big,” he said of the proposed 774-foot tall commercial tower. In September 2007, Extell filed plans with the Department of Buildings for a 61-story building including hotel rooms at the site.
Extell has held onto a number of development sites even as the building process slowed or stalled, including its International Gem Tower at 50 West 47th Street. But in this instance its unidentified European partner no longer wanted to maintain the project, Barnett said. (note: correction appended)
Barclays filed suit in New York State Supreme Court in October 2009 to foreclose on a $28.8 million loan made to Extell in September 2005. The lender claimed in legal papers that Extell defaulted on the loan after failing to make an interest payment in June 2009.
According to city property records, Extell assembled the site adjacent to the entrance to the Lincoln Tunnel, from three parcels: in 2005 paying $23 million to architectural maintenance company Stuart Dean, in 2007 paying $17.16 million to the Port Authority of New York & New Jersey and paying $14.1 million to a third entity called 456 West 31st Street.
Insiders blamed Extell’s loss to the overall lack of financing for hotel projects as well as the long wait before the No. 7 train extension reaches the West Side.