Gary Barnett is inching forward with his Diamond District hotel, securing a nine-figure financing package for the property’s development.
Extell Development landed a $220 million construction loan from Banco Inbursa for the project at 32 West 48th Street, PincusCo reported. The loan closed several weeks ago and hit property records shortly before Christmas.
Barnett filed plans for the 534-key, 169,000-square-foot hotel just over three years ago. Extell purchased the four-story former site of the Plaza Arcade diamond mini-mall in 2018 for $40 million, also snapping up air rights for several adjacent properties in hopes of building a hotel that would connect West 47th and West 48th streets.
But another landlord in the area has turned what would’ve already been a complicated pandemic-era hospitality project into an even greater saga.
A yearslong dispute has persisted between Extell and the Elo Organization, which owns the building adjacent to the hotel site. Elo refused Barnett’s attempts to install safety precautions on its building, a process interrupted by an 18-inch strip both companies claim to own.
Elo has used adverse possession law to argue its case, claiming in a lawsuit that the building Extell demolished to make way for the hotel didn’t reach all the way to the lot line with Elo’s building, leaving a small gap of fewer than two feet. A judge ruled in Extell’s favor in 2019, but that order only applied to installing protections for demolition and not the subsequent construction.
Extell has previously said it was moving forward with its project, despite the dispute. The firm did not immediately respond to a request for comment from The Real Deal. Elo could not immediately be reached.
Extell is developing multiple hotels in Midtown Manhattan in a time that’s shown some promise for hospitality bosses.
Tourists are flocking back to New York City post-pandemic and local officials clamping down on short-term rentals like Airbnb. For the first seven months of the year — before the latest Airbnb regulations were even in place — the average daily room rate was $264, according to STR, up 8 percent from a year earlier.
— Holden Walter-Warner