Trevor DavisTrevor Davis could hardly be called shy, but the last few months have probably tested his stomach for public scrutiny.
The down market hasn’t been kind to the gregarious, South African-born developer, known for hunting big game and taking on big, controversial projects.
“He’s been a little quiet, actually,” said Dan Fasulo, managing director of research at Real Capital Analytics. “This downturn has been difficult for many local developers that didn’t have access to big institutional capital.”
Much of Davis’s turmoil of late has sprung from 1055 Park Avenue, a luxury glass condo surrounded by rows of stately prewar co-ops. Its five apartments feature floor-to-ceiling glass enclosures that seem better fit for Soho or Chelsea than its neighborhood of Carnegie Hill. After a series of cuts, apartment prices range from $4.3 million to $7.5 million.
Davis has shrugged off concerns about the project, insisting that he has interested buyers and praising the new marketing team from Prudential Douglas Elliman, which replaced the Marketing Directors in August.
In an interview in early December, Davis told The Real Deal that “we’re actually doing really well” and that “nothing has affected the sales program.” At the time of the interview, Davis had narrowly avoided foreclosure at 1055 Park, which was scheduled to be auctioned off in early December after senior lender Wrightwood Capital sold off the senior mortgage debt.
And the headlines of late do not paint a rosy picture about how Davis, who declined to comment for this story, is doing.
Late last month the Wall Street Journal reported that one of the five apartments went into contract for just under $4 million, which brokers said was a “distressed” price.
And, after negotiations fell apart with the 1055 Park lenders, Davis filed for personal Chapter 11 bankruptcy protection in December, in advance of a scheduled foreclosure sale. In court filings, Davis claimed that subordinate lender Zimco Holdings — which in March had actually loaned him $6 million to complete the 1055 Park project after other lenders allegedly cut off funding — called in a default on debt and was planning a Dec. 17 auction, according to court documents.
The bankruptcy filing shed even more light on his troubled portfolio.
For example, in an affidavit, Davis claimed to have $75 million in assets and $50 million in secured debt, and listed his East 78th Street home and three assets he owns through limited liability companies: an unbuilt commercial condo at 65th and Lexington, a farm in Dutchess County, and a partially completed house on the island of Anguilla in the eastern Caribbean. Primary residences are almost always protected in bankruptcy, but questions remain over what will happen to his secondary homes and vacation properties.
The bankruptcy filing marks a dramatic turn for Davis, a fixture on the New York scene for nearly 20 years. He first made a splash as the third wheel in a partnership with developers Aby Rosen and Michael Fuchs.
Under the partnership, which operated as RFD Holding, the three developed such high-profile residences as 425 Fifth Avenue and the Seville at 300 East 77th Street. But one of the trio’s highest-profile projects, the Empire Condominium at 188 East 78th Street, was mired in scandal for years.
Rosen and Fuchs were not available for comment.
The Davis partnership with Rosen and Fuchs came to an unceremonious end not long after the state Attorney General targeted the firm in 2003 after allegations of construction defects at the Empire, including leaks, mold and other problems. That led to a multimillion-dollar repair bill and years of litigation with unit owners.
Despite striking out on his own, Davis has never been shy about making waves. In 2009, he incurred the wrath of Upper East Side residents when he tore down a historic townhouse on East 65th Street to make room for a new condo. Davis originally acquired the so-called Kean Residence for $23 million, with plans to convert the site into a 25-unit condo project called the Honore. But the project faced intense opposition from local preservationist groups.
“The proposal was for something that was out of context on such a vital corner,” said Tara Kelly, executive director of Friends of the Upper East Side Historic Districts.
As The Real Deal has previously reported, the lender, Ark Real Estate Partners, filed suit to foreclose on the property in November 2009, after Davis missed a $95,000 mortgage payment and fell behind with construction firm MRC Contracting.
Davis, at the time, vowed that he would work out a deal with lenders and move forward with the project. However, in October 2010, Grubb & Ellis brokered the sale of the debt to Toll Brothers after plans for the development were approved by the Landmarks Preservation Commission.
Vincent Carrega, executive vice president of Grubb & Ellis’s investment group, has nothing but praise for Davis, calling him “one of the smartest guys around,” and blames the failure of the original project on the slump in the capital markets.
“I think it was purely a function of the market and what was going on with financing of deals of this type,” Carrega told The Real Deal.
Toll Brothers plans to develop the site into a 23-unit condo based on the existing plans, and executives there argue that the company will succeed based on the builder’s lower cost basis and greater access to financing. “He’s not capitalized the way we are, and he’s also come in at different costs,” David Von Spreckelsen, senior vice president at Toll Brothers, told The Real Deal.
It remains to be seen if Davis can escape his current predicament.
His financial issues, for example, appear to go beyond his residential real estate business, as his landlord filed suit in October for a $97,000 judgment for unpaid rent at 860 Lexington Avenue, where Davis had an office. Suzanne Berger, an attorney for the landlord, which operates under the name Top Hill, said the bankruptcy filing would put that case on hold. “[He’s] no longer in possession, but he guaranteed the lease and he owes my client through the end of that lease term,” she added.
Davis was also sued by Bank of America in 2009 after defaulting on an apartment at the Empire, where his wife and family lived. Alan Gelb, attorney for Diane Davis, the developer’s wife, said an agreement was reached to halt the foreclosure.
Just last month, however, Bank of America filed a new lawsuit, naming the developer as a defendant.
Meanwhile, a separate foreclosure was filed in Dutchess County against Davis. And that property was cross-collateralized with the 78th Street property, meaning a default on one property could trigger a default on the other.
Davis’s lawyers declined comment, as did lawyers for Bank of America.
Jonathan Miller, president of appraisal firm Miller Samuel, said the question of whether Davis survives this episode well will largely hinge on the number and amount of personal guarantees he made in connection with these projects. He agreed that Davis’s story is not unique.
“This is the challenge facing developers that went too far into the boom,” said Miller. “Builders tend to build until they can’t build anymore. More often than not, it doesn’t end well.”