Gary Barnett’s Extell Development has brought on a new CEO at a time when its inventory’s fate is at the mercy of the market.
On Monday, the prolific developer handed the keys to his castle to Sush Torgalkar — the 42-year-old former COO of Westbrook Partners and a well-liked executive known for his access to institutional investors and ability to navigate thorny deals.
Barnett didn’t offer a reason for bringing on a new president and CEO, which comes as the firm is tackling a diverse set of projects including a hotel in Midtown, while promoting several ambitious condo projects — including the $4 billion Central Park Tower — amid a well-documented housing slowdown.
As one of the most active developers in the city, Extell has a pipeline comprised of nearly 3 million square feet and roughly 1,567 residential units, according to an analysis last year of building permits by The Real Deal. Barnett has amassed that footprint by outmaneuvering the competition and not backing down from controversy.
But the market has cooled considerably. And in 2016, Extell’s master assembler Dov Hertz — responsible for cobbling together developments sites for One57 and One Manhattan Square — left to start his own firm.
“[Torgalkar] has proven himself to be a leader with strong relationships in the capital markets and a keen understanding of the real estate industry,” said Barnett, 63, who will remain Extell’s chairman. Torgalkar, meanwhile, will be tasked with growing the company’s business and overseeing its portfolio which spans 20 million square feet across 35 projects.
Torgalkar, who referred to Barnett as a “mentor,” comes to Extell after spending nearly his entire career at Westbrook, an investment firm with $20 billion under management. The two first met 13 years ago when their companies partnered on two Upper East Side projects.
“He more or less ran Westbrook for many years,” said developer Ziel Feldman of HFZ Capital Group, with whom Westbrook is partnering on the conversion of the Belnord, an iconic, gated complex on the Upper West Side. “Sush is one of the smartest people in real estate, and one of the more liked people.”
Torgalkar is the son of Indian immigrants who grew up in Cleveland, where he waited tables at his parents’ restaurant.
“We didn’t get a lot of customers,” he was once quoted as saying. “I basically learned how not to run a business.”
Still, that taste of the hospitality business propelled him to Cornell University and its hotel administration program. During the summers, Torgalkar worked at Merrill Lynch and he started working there as an investment banker after graduation in 1999. A year later, he joined Westbrook where he rose to chief operating officer.
Torgalkar’s fast rise — he’s appeared on a number of “30 Under 30” and “40 Under 40” lists — was partly the result of a serendipitous encounter with Westbrook co-founder and CEO Paul Kazilionis in 2000.
As a new associate, Torgalkar was dispatched to fetch coffee for the boss and as luck would have it, Kazilionis found him struggling with the office coffee machine. They started talking and Kazilionis became a mentor. Torgalkar, who spent time in Westbrook’s London office, was ultimately appointed COO, becoming the face of the firm in New York in recent years and carrying out its day-to-day operations.
Founded in 1994, Westbrook is predominantly known for buying stakes in major commercial properties — 1375 Broadway — and hotels — Union Square W Hotel. But it’s been an active partner on several luxury condos, too.
In addition to the Belnord, Westbrook partnered with DDG to develop the Standish, a conversion of the Standish Hotel, where a $16.75 million penthouse purchased by the actor Matt Damon just set a new Brooklyn sales record.
“Sush embodies the attributes you want in a partner,” said Joe McMillan, DDG chairman and CEO. “He’s one of the smartest people in the business and a true gentleman.”
Under Torgalkar, Westbrook also has sunk its teeth into complex deals — like 47 Hall, a warehouse-to-office conversion with Scott Rechler’s RXR Realty, and the St. John’s Terminal, where it is developing the northern portion with Atlas Capital Group.
Westbrook paid $200 million to buy a majority stake in the project from Fortress Investment Group in 2015. Westbrook and Atlas later sold the southern portion of the property for $700 million to Oxford Properties Group, which is planning a 1.3 million-square-foot office.
“Sush is a pro,” said Doug Harmon of Cushman & Wakefield who was involved in both deals. “He is thoughtful and measured and a very good steward of capital.”
At Extell, Torgalkar’s connections to institutional capital will come in handy. In January 2018, Extell closed on $1.14 billion in financing for Central Park Tower — a feat many didn’t believe Barnett could pull off in a sluggish market. With 179 units and a sellout of $4 billion, it is one of the most ambitious projects to date.
And the developer has a 68-story condo development under construction in Brooklyn, and it just cobbled together a massive assemblage in the Diamond District with plans for a hotel (Extell has yet to file plans or secure a construction loan for the project).
Over the summer, Extell’s former sales director Anna Zarro stepped down from her post, leaving Extell searching for a replacement capable of taking on the heavy load. She is still advising on the firm’s rental projects.
“He’s got some really tough projects,” one executive said at the time. “You’re going to be under the microscope for years.”
Torgalkar is known to be extremely detail-oriented, with a track record of raising money and putting together teams to supervise and execute complex projects, Feldman said.
“He’s an astute investor,” he said. “He’s made a lot of smart investments over the years in good markets and bad markets.”