Instead of raising $20 million to renovate its 35-year-old library, the Jewish Theological Seminary put their faith in a prophetic idea pitched by a Savills Studley duo to monetize its real estate.
The deal not only filled the institution’s coffers to the tune of $131 million through a pair of real estate deals, but also put the brokers in the running for a Real Estate Board of New York’s Most Ingenious Deal of the Year Award.
David Carlos and Ira Schuman’s submission, titled “Repositioning Real Estate or Reimagining the Promise Land?,” is one of 15 transactions in the running for the industry’s most-coveted deal making award. The tales, which The Real Deal is covering in a series of stories, shine a light on how brokers maneuver behind-the-scenes to pull off hairy transactions.
Last year, the seminary sold a piece of land on its campus at 3080 Broadway and an off-campus Dormitory On West 120th Street to Savanna for $96 million, and also sold a mixed-use multifamily-and-retail building at 3060 Broadway for $35.3 million to a joint venture of Esplanade Partners, Coltown Properties and Avenue Realty Capital.
But the deals got their start about three years earlier, when Carlos and Schuman approached Marc Gary, vice chancellor of the seminary, in 2013. The school had a plan to raise $20 million to renovate its library, which was just 35 years old at that point.
But the brokers had another idea that was counterintuitive: Sell the library, which sat on top of a hill and would command top dollar from a developer interested in the superior light and views.
“It was no easy task in convincing these folks that they should change course and do this very complicated, long-term real estate deal,” Carlos told TRD.
After the board approved the plan, the seminary’s architects set to work figuring out where they could build a new 100,000-square-foot building on-campus, but struggled to figure out the logistics.
“Every day that passed, Carlos and Schuman’s credibility was at risk…’Maybe this isn’t the right plan?’ ‘Can we actually do this?’” the brokers wrote. “Seeds of doubt were beginning to emerge at JTS. Carlos and Schuman had to act and act fast or else 18 months of intense work was for naught.”
The Studley brokers took matters into their own hands and hired Harry Kendall at BKSK Architects, who helped identify a little-known quirk in the zoning law: The city allows the pitched rooftops of community facility buildings to be included in calculating FAR, so long as the buildings are contiguous. The seminary wanted the new building to be freestanding, but if it went ahead and made it about the new buildings, the brokers could sell the FAR that came from the pitched roofs and sweeten the pot.
But the team faced another problem. They needed to divide the tax lot in order to sell the library to Savanna, but the city only issues tax-lot subdivisions on vacant land.
“If we demolished the Library in anticipation of getting the tax lot subdivision followed by the closing…what would happen if the market changed or Savanna otherwise failed to close?” the brokers wrote. “All the deals would crap out, JTS would have only its deposits which, in the real world of New York City real estate may or may not be kept and the library would now be demolished…WORST OF ALL WORLDS.”
The solution was to negotiate a “Talmudic-length Zoning Lot Development Agreement” that, for the first time ever, saw the city split the tax lot so the JTS could convey the land to Savanna.