Gamma wins 3 Sutton Place at foreclosure auction

Deal is "canary in the coal mine" for high-end condo land market: source

From left: Rendering of 3 Sutton Place, Joseph Beninati and N. Richard Kalikow
From left: Rendering of 3 Sutton Place, Joseph Beninati and N. Richard Kalikow

N. Richard Kalikow’s Gamma Real Estate outbid Brooklyn investor Isaac Hager Tuesday to acquire a prime Upper East Side development site at 3 Sutton Place in a hotly anticipated foreclosure auction, The Real Deal has learned.

Gamma, which was the original lender on the deal, paid about $86 million for the site plus $12 million to secure additional air rights. Insiders previously speculated that Gamma would pay as much as $187 million to take control of the property, which offers a little over 260,000 buildable square feet. But sources said the final price signaled that the land market for luxury condominium development has plummeted.

“It’s a canary coughing in the coal mine solely for the development market,” said David Schechtman of Meridian Capital [TRDataCustom], who brokered the deal alongside colleague Lipa Lieberman and a team from JLL. “It’s the bellwether for high-end condo developments.”

David Schechtman

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Kalikow personally attended the auction, as did Hager, who communicated constantly by phone with his undisclosed investors. Beninati, whose investment in the property was wiped out by the deal, phoned in to the auction.

Beninati’s Bauhouse Group assembled the site with the help of $147 million in loans from Gamma. But in January, Beninati defaulted on the loans and subsequently filed for bankruptcy to prevent Gamma from foreclosing on the property.

A Bankruptcy Court finally gave the green light for a sale of the condominium project in September.

Kalikow’s plans for the site were not immediately clear. He could opt to sell the property, move ahead with the condo himself or bring in a joint-venture partner.