The Real Deal New York

Extell sells $107M in shares at its $4B Central Park Tower condo project

Sale of 17% of Class B shares will bring $94M in cashflow: TASE documents
By Chava Gourarie | March 13, 2018 04:05PM

Gary Barnett and Central Park Tower at 217 West 57th Street

Gary Barnett’s Extell Development sold $107 million worth of preferred shares in the $4 billion Central Park Tower development, according to documents filed with the Tel Aviv Stock Exchange on Monday. The deal will provide $94 million of cashflow for the development of the 95-story condominium tower.

According to the terms of the deal, Extell will sell six Series B shares in the joint venture formed by Extell and Shanghai Municipal Investment in May 2016, or $107 million, to a group of investors. The shares comprise 17 percent of the Class B shares, which do not include voting rights.

Barnett closed on a $1.14 billion construction financing package in December 2017 for what will be New York’s most expensive condo project ever. The New York State Attorney General’s office approved the offering plan with a $4 billion sellout for 179 units. And while sales haven’t officially launched, Barnett has begun the process of marketing the units. And he’s not being bashful — Barnett is the first developer to attempt to sell 20 units priced at $60 million or more at one project.

During an investor meeting on Monday, Extell also announced a $75 million dividend. In response, Israeli rating agency Midroog on Tuesday reduced the rating of Extell’s bonds to A3 with a negative outlook (it should be noted that it’s still low-risk). It’s the second time the bonds ratings have been reduced: In August, the bonds were downgraded from A2 to A3 with a stable outlook. In all, Barnett has raised 1.65 billion Shekel, which translates to roughly $480 million, in two rounds of bonds. Payment is due between December 2018 and December 2021.

Extell did not respond to request for comment.

The condo project’s capital stack includes EB-5 money, a $300 million investment from SMI USA, and more than $400 million from Nordstrom for the seven-story flagship at the base of the tower. Per the terms of financing, Extell must sell $500 million worth of apartments in three years, by December 2020, and must pay down $300 million of the JPMorgan Chase principal from the proceeds of apartment sales by the following year, according to the TASE documents.