Luxury-condo builder Extell Development Co. said it obtained a construction loan for a lower Manhattan project after months of delays, and bought more time to get financing for a planned tower on Billionaires' Row in Midtown.
Extell got a $500 million loan for its One Manhattan Square development from a consortium of lenders including Deutsche Bank AG, Commercial Bank of China and Natixis Real Estate Capital, according to filings Thursday on the Tel Aviv Stock Exchange, where the New York-based company sells debt to investors. The loan could grow to $750 million within nine months, according to the documents, written in Hebrew.
In a separate filing, Extell said its deadline to find financing for Central Park Tower, a planned $3 billion skyscraper on West 57th Street, was extended to July 31 from May 24. The timeline is critical, according to terms of a joint-venture agreement it signed last month with China's SMI USA. If Extell fails to get a loan by the deadline, SMI can require the builder 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.
Extell President Gary Barnett didn't immediately respond to an e-mail seeking comment.
The company's Israeli investors reacted positively to the news. Extell's 4.65% bonds due in 2019 jumped 3.2% to 87 agorot ($0.23) at the close of trading in Tel Aviv. The yield dropped 1.23 percentage points to 10%.
Extell, which ushered in Manhattan's luxury-condo boom with the construction of the One57 skyscraper across from Carnegie Hall, is now getting caught up in its aftermath. The market for high-end homes is slowing as inventory swells and demand from ultra-wealthy buyers cools amid so much competition. That has made construction loans increasingly hard to get, as lenders shy away from funding potentially risky projects.
The loan for the 815-unit One Manhattan Square, on South Street, means Extell can complete a separate financing agreement with office landlord RXR Realty LLC to build the tower. RXR will commit $300 million toward the project, and choose within 120 days of the deal closing whether it wants to add an additional $163.2 million, according to filings in Israel last month. RXR had initially pledged $463.2 million in March, but reduced its commitment after Extell's delay in getting a construction loan.
Extell said it is missing only one signature to complete the deal with RXR, according to Thursday's filing.
