Extell's 50 West 66th St Chopped

I do not get it. Extel has not sold their Central Park South tower or 157 West 57th and they can raise money for one more project???

Add Brooklyn Point with 485 units and One Manhattan Square with 815 units to the list.

I think you have to go further than that. Based on purchases of buildable sites they would appear to have a whole bunch of stuff in the pipeline, bought at prices where the only justification is building.

Does it mean that they raised equity in 2015 already? Do they still have to get construction loan if the construction has not started?

Overpaying for land is not ideal but in my experience, if you can get a construction loan, you will build. Period. And equity is equity to a bank so they may give you full credit for the land costs regardless of what it is worth today.

Extell has been amazingly adept at shifting risk to other parties such as construction lenders, and mezzanine/preferred equity/equity investors. They have relationships out the gazoo and banks fall over themselves trying to hand them money.

Developers buy land and hold or buy land and build. Rarely will they not want to buy land even at a premium as inflation will almost always bail them out sooner or later. If you don't have a long-term outlook for your business, you should not be a Manhattan developer.

Of course, this does not mean that you can not overextend yourself. The Manhattan market is littered with the bones of developers who were not capable of surviving a downturn. From what I know of Extell, they are playing the game quite well although I do see concerns that they may have been a little too overconfident. We will know soon enough I guess.

I think senior lending from the bank is understandable as in the worst case, they will own be building. But who are the people who committed equity and preferred? Those are likely worth very little for ultra luxury project costing $3500 per sq ft “all in” in prime areas which needs to be sold at $4k per sq ft before equity makes any money for 5-6y project life.

FWIW it looks like they have offloaded a number of their development sites which they had aquired with the intention of developing themselves.

Did they take a loss when they offloaded?