Extell Development Sells Discounted Interest in Manhattan Rentals

Gary Barnett, President of Extell, 510 East 14th Street and Scott Rechler, CEO of RXR Realty (Getty, EVGB)

Extell Development sells a stake in two Manhattan properties as it faces a stagnant luxury residential market.

The development company, led by Gary Barnett, will sell a 42% stake in a portfolio of rental apartments to RXR Realty, the Financial Times reported.

The transaction includes 750 units in two buildings in Manhattan: 555TEN, at 555 10th Avenue in Hell’s Kitchen, and EVGB, at 510 East 14th Street in the East Village.

555 10th Avenue (Extell)

555 10th Avenue (Extell)

For RXR Realty, the transaction represents a godsend. It values ​​the portfolio at around $ 800 million, while a pre-pandemic valuation pegged rents at $ 1 billion.

The condominium market was sluggish even before Covid delayed construction and virtually eliminated international travel, blocking a large pool of buyers. This is bad news for Extell, who developed the towers of Billionaires’ Row Central Park Tower and One57. Sales would have been slow in the former, and the latter recently recorded a resale of condos with a loss of 51%.

Extell sought to raise funds from hedge funds and issued Israeli bonds. In June 2020, the Israeli rating agency Midroog downgraded Extell’s bonds one level, with a negative outlook, due to another expected drop in condominium sales.

Speaking to the Financial Times in late 2020, Barnett said it was “very frustrating to build the most beautiful buildings in the world – great quality, great finishes – and having to sell at a loss.”

[FT] – Georgia Kromrei

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