The partners started talks with other experienced condo developers such as Witkoff and Michael Stern’s JDS Development to come in and help see the project through. Moreover, units at 125 Greenwich were asking an average of $2,800 per square foot, a premium above projects in the area. It’s not in the heart of the Financial District and sits across from a giant hole where Silverstein Properties and Brookfield Properties plan to build Five World Trade Center. The site sits in a part of Lower Manhattan that some consider a dead zone. Insiders put part of the blame on the location.īy signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy. Sales finally launched in 2017, but were cold. A source close to the matter said Shvo’s indictment threw the financing into disarray - banks can take a dim view of sponsors caught up in criminal matters - eventually forcing the partners to buy out his stake in 2018. That same year, Shvo was indicted by the Manhattan District Attorney on tax evasion charges. In 2016, Michaels’ Carlton Group, which arranged the financing, sued the development group over commissions on the EB-5 loan and an equity injection from New Valley. They landed the EB-5 funding, but trouble emerged. ![]() 125 Greenwich’s initial org chart and a rendering of 125 Greenwich “Frankly, you guys would be nuts not to sign this EB-5 money up,” said Michaels, who died in September 2018. developers through the controversial cash-for-green card program. Immigration Fund, a major EB-5 regional center that was raising capital for U.S. He pressed them to take on $174 million in funds from Nicholas Mastroianni II’s U.S. “As discussed, none of you are looking to write a big equity check for the actual development of the property,” Michaels wrote in an email to the development team. Forced to look elsewhere, the developers sought cheap, short-term funding from EB-5 investors. By 2015, the developers were in talks to land around $500 million in construction financing from United Overseas Bank, but the deal couldn’t close. The projected sellout was just under $900 million, filings with the New York Attorney General show.īut getting things moving proved difficult. But unlike most other luxury towers that offer big-ticket buyers the highest floors as penthouses, here the top three floors would boast amenities, including a 50-foot lap pool with views of the city. The design was simple: The tower would rise 912 feet and 88 stories, with curved corners and shiny blue glass windows. “I thought this project was perfect to create a supertall Downtown, something that did not exist,” Shvo told TRD in 2018. “Frankly, you guys would be nuts not to sign this EB-5 money up.” Howard Michaels, the pugnacious financier who founded Carlton Group, chipped in equity as well. Cindat, an affiliate of a major Chinese asset manager with strong government ties, came in as a limited partner with a $55 million preferred-equity investment. Shvo, a buccaneering new development broker turned luxury condo developer, brought on Howard Lorber’s New Valley and Bizzi & Partners and nabbed $170 million in financing from Singapore-based United Overseas Bank and Taro Pharmaceutical Industries. Two years later, as Manhattan’s condo market was roaring, Witkoff and Fisher sold the site to Michael Shvo for $185 million, nearly $100 million more than they paid for it. They tapped Viñoly, the Uruguayan starchitect behind 432 Park, to design what would be the tallest residential building in Lower Manhattan. In 2012, Steve Witkoff and Fisher Brothers acquired the site for $87.5 million. ![]() It was undercapitalized, its Chinese partner and lenders were taking heat in their home country, and the condo market turned for the worse, leading to weak sales. ![]() According to them, the Rafael Viñoly-designed tower ran into a perfect storm of problems. To understand how 125 Greenwich was brought back to life, The Real Deal interviewed many of the key players involved, from those in the spotlight to those pulling the strings behind the scenes. The project might not make money anytime soon, but if completed it will rank among the biggest comeback tales in recent New York real estate history. “We were able to restructure with a formula that will allow us to complete the project,” said Alessandro Pallaoro, managing director of Bizzi & Partners, a co-sponsor and public face of the development. Sales are expected to relaunch this year. Fortress Investment Group, the powerful distressed investor who held the debt on the tower, is now an equity partner. In early February, the partners restructured and scored $313 million in financing from Northwind Group to finish construction.
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