Joseph Chetrit is on the cusp of closing his $1.1 billion purchase of the Sony tower at 550 Madison Avenue, which he plans to convert into high-end retail shops, luxury condominiums and a hotel. And new details about the deal, reported by the New York Times, reveal that the secretive investor won the Sony building with a $100 million down payment and a letter of credit worth nearly $600 million from a sovereign Middle Eastern investment fund.
Additionally, SL Green Realty, a rival bidder, arranged $925 million in financing for the transaction to allow Chetrit to close the deal by Friday. The Bank of China is also expected to provide a $600 million mortgage, the Times reported.
Chetrit won the auction for the Sony building in January by beating out about 20 other bidders, as previously reported.
However, real estate experts told the Times that the deal for the Sony building is a risky one considering it will take up to two years and $500 million for the Chetrit Group to renovate the building. Interest rates, the Times noted, can soar and the market for expensive condos can change dramatically before the building reopens in 2019.
Chetrit has always been a person of curiosity in the real estate industry. He came to the U.S. in the late 1980s with roots in eastern Morocco, where his family was active in the import-export business. He worked in the garment industry initially but in 1990 pleaded guilty to violating customs laws after illegally importing more than 1.5 million square yards of fabric into the U.S. from South Korea.
Chetrit was sentenced to three years of probation, 250 hours of community service and fined $10,000 as a result. He got into real estate shortly after, having lost his garment business as a result of his sentence.
“He has a nose for finding deals and an ability to make people comfortable with his ability to close a transaction quickly,” Ivan Kaufman, chief executive of Arbor Realty Trust, who has been an investor and lender to Chetrit’s past projects, told the Times. “He is somewhat secretive so it’s hard to know all that he’s involved in.”
As for the Sony Building, Chetrit told the Times, “It’s a beautiful, iconic building. We’re going to keep it that way.” [NYT] –Hayley Kaplan