Extell Development is selling off a stake in two Manhattan properties as it contends with a stagnant luxury residential market.
The development firm, led by Gary Barnett, will sell a 42 percent stake in a portfolio of rental apartments to RXR Realty, the Financial Times reported.
The transaction includes 750 units across two Manhattan buildings: 555TEN, at 555 10th Avenue in Hell’s Kitchen, and EVGB, at 510 East 14th Street in the East Village.
For RXR Realty, the transaction represents a bargain. It values the portfolio at approximately $800 million, while a pre-pandemic valuation pegged the rentals at $1 billion.
The condo market was sluggish even before Covid delayed construction and all but eliminated international travel, effectively shutting out a significant pool of buyers. That’s bad news for Extell, which developed the Billionaires’ Row towers Central Park Tower and One57. Sales have reportedly been sluggish at the former, and the latter recently recorded a condo resale at a 51 percent loss.
Extell has sought to raise money from hedge funds and issued Israeli bonds. In June 2020, Israeli credit-rating agency Midroog downgraded Extell’s bonds one level, with a negative outlook, due to an expected further decline in condo sales.
Speaking to the Financial Times in late 2020, Barnett said it was “very frustrating to build the most beautiful buildings in the world — super quality, super finishes — and to have to sell at a loss.”
[FT] — Georgia Kromrei