The Real Deal New York

Paydirt: “The Prestige,” starring
Gary Barnett, StreetEasy delivers the coup de grâce

The industry news you need to start your week, and what’s ahead
By Hiten Samtani | June 26, 2017 11:00AM

From left: Pamela Liebman, Spencer Rascoff, Howard Lorber and Gary Barnett (top)

It was supposed to be the one that wouldn’t get built. A project of such ostentation, catering to such a rarefied set, that the money to realize it would not come together. Not even Gary Barnett, whose career has been all about pulling glitzy skyscrapers out of hats, would be able to build Central Park Tower, they said.

But now, Barnett looks to have secured the final piece of a fascinating capital stack. As my colleague Mark Maurer reported Friday, he’s signed a term sheet with a group led by JPMorgan Chase for a $900 million construction loan, which allows him to repay his bridge financing, honor his covenant with his key equity investor SMI, and get the damn thing built.

This is a major triumph for Extell, and should be cause to pop kosher bubbly at its 805 Third Avenue HQ were it not for some sobering news at the firm’s other marquee project, One57. For the second time in a month, an apartment at the super-luxury tower is facing foreclosure. The buyer paid $50.9 million for a full-floor penthouse in 2014, but couldn’t keep up with the mortgage, according to Bloomberg . Remember, Central Park Tower is poised to be the priciest new development in the city’s history, with a total projected sellout of $4 billion across 179 units. It doesn’t inspire confidence in the ultra high-end market if its most notable symbol has at least two apartments under water and several unsold.

Fans of Chris Nolan will recall Michael Caine’s monologue from “The Prestige.”

“Every great magic trick consists of three parts or acts. The first part is called “The Pledge”. The magician shows you something ordinary: a deck of cards, a bird or a man. He shows you this object. Perhaps he asks you to inspect it to see if it is indeed real, unaltered, normal. But of course… it probably isn’t. The second act is called “The Turn”. The magician takes the ordinary something and makes it do something extraordinary. Now you’re looking for the secret… but you won’t find it, because of course you’re not really looking. You don’t really want to know. You want to be fooled. But you wouldn’t clap yet. Because making something disappear isn’t enough; you have to bring it back. That’s why every magic trick has a third act, the hardest part, the part we call “The Prestige”.”

With the JPMorgan loan, Barnett has pulled off “The Turn”- financing a project of this ambition in such a skittish market is extraordinary. But can he deliver a successful product, or will CPT become the next cycle’s cautionary tale? It’s not time to clap just yet.

If it bleeds, it (buys) leads: That was almost too easy for StreetEasy. Roll out a program in March. Take some heat from brokerage bosses, make a few surface-level tweaks to your cash cow. Attract individual agents first, dangling the prospect of hard leads. And within three months, strike a deal with the heads of the very firms who all but called your program unconstitutional, firmly establishing it in the marketplace.

Douglas Elliman, the Corcoran Group, Nest Seekers International and BOND New York are now participating in StreetEasy’s Premier Broker, a program that lets firms purchase bundles of buyer leads from the online listings platform.

“This is a program where the buyers are actually requesting help and more information and we’re buying positioning where we can help them,” Elliman’s COO Scott Durkin told my colleague E.B. Solomont.

While that’s technically true, it ignores what has just happened: The firms decided to support StreetEasy on an institutional level. The platform has the content, it now also has the buy-in. Let’s call the deal between StreetEasy and four of New York’s biggest residential firms what it really is: A decisive victory for Zillow, and the day the firms officially abdicated the throne.

(Paydirt is a weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick. Read more from Paydirt here.)