As Sharif El-Gamal sought to refinance 45 Park Place, construction crews prepared to abandon the luxury condo site this week over nearly $10 million in unpaid work — just a month shy of topping out.
Gilbane Building Company, which El-Gamal’s Soho Properties contracted to build the 43-story Tribeca tower, had not received payment for work completed in 2019 and only “minimal” payments for work done during 2018, sources told The Real Deal.
In an eleventh hour episode Friday evening, as TRD prepared to publish a story on the saga, El-Gamal paid Gilbane close to $10 million. As Gilbane waited for the payment to go through Monday, the firm dispatched only a “handful” of subcontractors the site, according to sources.
In an interview, El-Gamal said that the delayed payment had stemmed from an issue that occurred in May last year, when Parkside Construction, a subcontractor of Gilbane, was booted from the site following an indictment for employment fraud.
“There was work that was imperfected,” El-Gamal said. “That has a whole trickle effect.”
When asked why he had chosen to pay the construction company late on Friday, El-Gamal said that he pays his bills on Fridays.
In an emailed statement, a spokesman for Gilbane said the company was “pleased to be building 45 Park Place to the highest industry standards and looks forward to continuing our work on this outstanding project.”
The incident comes as El-Gamal searches for a nearly $200 million condo inventory loan at the 50-unit project amid slow condo sales. El-Gamal said he is currently negotiating with Madison Realty Capital for a loan valued between $170 million and $190 million, and is separately discussing the possibility of extending the current construction loan with the lending consortium he has now, a move that would buy him more time when the existing debt comes due this summer. Madison declined to comment.
El-Gamal, a practicing Muslim, said that any future financing at the building, which features an Islamic center, would be done in compliance with murabaha, a method of payment compliant with Sharia law, which does not allow lenders to charge interest.
He initially had trouble securing financing for the building from U.S. lenders, and instead was successful in drawing a consortium of foreign lenders to finance the construction loan with murabaha.
El-Gamal secured that $219 million loan in 2016 from a group of senior lenders that included Malaysian bank Malayan Banking Berhad (Maybank) and Kuwait-based Warba Bank and a mezzanine loan provided by Saudi family Al Subeaei. Later, MSD Partners, an investment advisory firm led by the principals of Michael Dell’s family office MSD Capital, also took an undisclosed stake in the senior loan. Those lenders could not be immediately reached for comment. MSD declined to comment.
The debt replaced a $33 million pre-construction loan provided by Madison Realty Capital in 2014, when El-Gamal secured the site.
The residential tower has risen amid a drop in demand in the luxury apartment market. An offering plan for the site posted an estimated sellout of $408 million, a jump from the initial $391 million sellout estimate. At that figure, apartments are priced over $3,000 a square foot, higher than the average $2,788 a square foot for new development residential condominiums in Tribeca, according to Olshan Realty.
“It’s just a really hard market if you can’t wait around,” said Donna Olshan, chief executive of Olshan Realty.
There are currently 11 apartments in contract, according to StreetEasy. Corcoran Sunshine, which is marketing the project, withdrew all the other listings.
“That was a strategy that we have with Corcoran Sunshine,” El-Gamal said. “People aren’t buying off floor plans. [Corcoran Sunshine] said, ‘let’s get your building done and get people in through the door.’”
Corcoran Sunshine declined to comment.
Further uptown, El-Gamal recently secured refinancing for his Margaritaville hotel in Times Square, a 234-key, 170,000-square-foot tower at 560 Seventh Avenue. The $270 million loan was provided by senior lenders Related Fund Management (the debt arm of Related Companies) and investment firm Angelo Gordon, as well as mezzanine lender, South Korea-based Hana Financial Investment. That project is expected to open in 2020.