The Real Deal New York

Developer Joseph Beninati likely to lose all the money he pumped into 3 Sutton Place, broker running auction says

Site to hit bankruptcy auction block Tuesday
December 09, 2016 05:56PM

3 Sutton Place and Joseph Beninati

Rendering of 3 Sutton Place (credit: Foster + Partners) and Joseph Beninati

Joseph Beninati is likely to lose his entire $4.3 million investment in his Sutton Place condo development when the site hits the bankruptcy auction block Tuesday.

A broker running the auction expects the site will sell for around $187 million, or around $700 per square foot. That probably won’t be enough to pay off all the project’s creditors, which includes N. Richard Kalikow’s Gamma Real Estate TRData LogoTINY. Beninati will only see a share of the sales proceeds once all creditors are paid off.

Gamma can use some or all if the money it is owed by Beninati to bid on the site, Crain’s reports. The firm lent the developer around $147 million in high-interest loans last year. Unable to secure construction financing for his planned 68-story, Norman Foster-designed condo tower, Beninati defaulted on his loans in January.

In February, Beninati filed for bankruptcy in a doomed bid to hold on to the site at 3 Sutton Place.

Gamma’s Jonathan Kalikow claimed in a written testimony that Beninati received bids for the site in mid-2015 that would have netted him a $45 million profit. Beninati’s attorney disputes that, arguing that no bona fide bids ever came in.

Beninati sued Gamma, claiming the firm engaged in a “calculated scheme” to take over the site, but last week a judge struck down those claims. “The judge said these were a baseless set of accusations meant to buy time and hope,” Gamma’s attorney Jay Neveloff told The Real Deal. “It cost a year.”

Separately, a group of neighborhood activists opposed to the project filed a rezoning proposal with the Department of City Planning that would make high-rise construction impossible. The public review process on that proposal may take months. [Crain’s]Konrad Putzier