Chinese Fund NYC's Tallest Residential Skyscraper—at a Price
In a bid to keep its planned Central Park Tower afloat, Extell Development Co. agreed to a deal that might one day force it to part with the luxury condo project.
A joint venture with China’s SMI USA to build the $3 billion skyscraper on Manhattan’s Billionaires’ Row comes with a deadline: If a construction loan isn’t obtained by May 24, SMI can require Extell to buy out its stake in the partnership -- about $300 million -- with interest. And if Extell fails to do that, SMI can push the developer to sell the entire project, according to documents filed last week on the Tel Aviv Stock Exchange, where Extell sells debt to investors.
“If I thought there was a more than 1 percent chance of that happening, I wouldn’t put that in there,” Extell’s president, Gary Barnett, said in an interview. “We’re going to get the construction loan.”
In Manhattan’s slowing luxury condo market, where lenders and investors are shying away from financing projects, the partnership with SMI offers a way forward for the West 57th Street tower, in exchange for sizable promises up front. SMI, the U.S. subsidiary of Shanghai Municipal Investment, will get 30 percent of the fees the developers collect during construction, according to the filings. The Chinese firm also will receive monthly interest payments on its investment, based on a 4.5 percent annual return.
While Extell is in charge of all day-to-day matters on the project, SMI’s approval must be sought for “significant decisions,” according to the filings, written in Hebrew.