By the grace of God, Savills Studley’s David Carlos and Ira Schuman managed to sell an Upper West Side Jewish congregation’s home to Extell Development and Megalith Capital Management for $45 million in December.
Now, the brokers are hoping the deal gets the blessing of one of real estate’s highest powers.
Carlos and Schuman’s deal, christened “Divine Intervention or Deal: The story of the Sale, Repurchase, Rebuilding and Temporary Home for Congregation Habonim,” is one of 19 submissions nominated for the Real Estate Board of New York’s 2014 “Most Ingenious Deal of the Year” award. The submission, reviewed by The Real Deal, provides insight into how brokers go about pulling off some of the city’s most challenging real estate transactions.
One of the key components of the deal was that the Congregation Habonim, which runs a successful nursery school out of its decades-old synagogue at 44 West 66th Street, needed not only to find a new home that would double its size to roughly 25,000 square feet, but also required a temporary location where it could operate for five years during development.
“Money usually solves most problems, but we didn’t have any,” the brokers’ tale reads.
For at least 15 years, Habonim had sought a real estate solution. But when a potential 2007 deal to sell the property to Walt Disney Company — which owned most of the remainder of the block — fell apart, Mickey Mouse was miffed.
With that in mind, Carlos flew out to California in 2012 to mend the fences. He managed to broker a peace treaty between the two parties, after which he and Schuman started running through a list of options, ranging from a property swap to pursuing a joint venture.
By late 2013, Studley and Habonim had decided that the best course of action was to partner with a developer who would build on both the congregation and Disney’s sites.
“When we took the property to market, we held regular meetings with Disney to keep them abreast of the progression,” the submission reads. “But Disney’s real estate team made it quite clear: IF it was going to sell its properties, it would hold its own process, and it wasn’t necessarily going to cooperate with us. We wanted to sell our site to the most cooperative developer, yet highest bidder. Disney only cared about price—and it was quite possible the two parties wouldn’t be the same.”
The brokers contacted 800 developers, and 29 came back with offers. Both the congregation and Disney ultimately chose Sam Sidhu’s Megalith and Gary Barnett’s Extell, who were amenable to building a home for the synagogue through a buyback along with a luxury development.
The next step was to find a temporary home for the congregation during construction, which may have been the easier part of the whole deal if not for the fact that during the final walk-through for the site they had selected on West End Avenue, it became clear that the space was already leased to another tenant.
An agreement was finally hammered out, but the delay pushed the build-out deadline precariously late, and Carlos and Schuman pulled a Hail Mary by convincing the general contractor to work on Christmas Eve, thus ensuring the nursery school would open on time.
At one point early in the process, it became clear the length of the deal and the financial constraints would make the whole thing that much more difficult. Habonim’s Rabbi Joshua Katzan asked Schuman if there was anything he could do.
“‘Pray for low interest rates,’ Schuman replied. The next day, the Fed extended its policy of Quantitative Easing,” the brokers wrote. “Divine intervention indeed.”