Disaster at the Rushmore

Trolling through ACRIS, looks like a couple of out-of-towners bought 19E for 2.6m cash, no mtge recorded. Maybe they didn't know the building was in trouble - one of the earliest closings by the way.

http://streeteasy.com/nyc/sale/491644-condo-80-riverside-blvd-lincoln-square-new-york

just relisted 8E, 1492 sf, for $3,500,000. bizarre.

Googled the buyers' home address and man, they are fans of new-troubled-condo. Also bought at 75 wall st.

The higher priced apt might have a Terrace....

Please don't knock out-of-town investors. They increase the spankin'-brand-new rental inventory significantly, resulting in lower rents for you & me. I like them lots.

The $1440K 75 Wall St 31M purchase (different family member, it seems) is at least trying to rent for a 4.5% gross rental yield:

http://streeteasy.com/nyc/rental/613789-condo-75-wall-street-financial-district-new-york

Unfortunately, comps point to a market that is more in the 3.5% neigborhood, may 4% tops. Oh well.

reporting on 18e is messed up. doc says 2,009,705 but that's still a substantial discount, which works out to exactly 20% off.

reporting on 18e is messed up. doc says 2,009,705 but that's still a substantial discount, which works out to exactly 20% off.

I've seen this error happen before. Anyone know why on ACRIS the summary doesn't match the doc contents?

Apparently the huge terrace is worth over $1M... despite the fact that you can't use it for half the year.

RS: If the ask was 2,800,000 (as it was with 17E, the same footprint as 18E), then even if it was 2.009.705 instead of the SE print of 1.9+, that is still a 28% discount from ask.

18E WAS 2.5
17E has the terrace and was 2.8

http://therealdeal.com/newyork/articles/gary-barnett-extell-faces-hud-probe-over-rushmore-complaints-from-andrew-cuomo

As I said 2 weeks ago just wait a couple of weeks. 100 million in contracts are about to walk out the door. The AG will rule in favor of the buyers in three weeks. Then the bankruptcy is only a matter of time

And the closings continue...

http://therealdeal.com/newyork/articles/gary-barnett-and-partner-spar-at-470-broome-street-extell-head-says-claims-of-siphoning-money-are-nonsense

nyc2009: yes, that article was discussed in another thread. The above article discussed in same thread, if true, casts Barnett in the most negative light -- suggesting he was looting other projects to pay Rushmore expenses. It seems clear from the article you posted that the Strook typo error was not an error afterall. Can you please site your source for your claims of bankruptcy and AG ruling?

It also begs the question: Why the hell is the NYTimes not covering this story. Perhaps protecting their advertising revenue from Extell projects? The NY Times should be shamed. This is a critical local story of a private company that controls a huge amount of Manhattan RE.

The other possibility is it's a non-story. Should be interesting to watch though.

The source is the AG's office.

nyc2009: Do you have an inside source at the AG's office or are you referring to publicly disseminated information? If the latter, what exactly are you referring to?

All you need is an offering plan for the Rushmore. The plan has to be approved by the AG's office. On the AG's website you can see the name of the person that approved it. You can call the AG's office and ask to speak to them and ask for yourself.

Well then it is remarkable that there are closings at all. If you have an offering plan, does that mean that you are/were a potential buyer. Are you part of lawsuit against Extell?

A broker was bragging to me a few weeks ago that they were taking Chinese investor/buyers to the Rushmore to buy up all the inventory. I thought it was a terrible offense to mislead foreigners and obviously not fully disclose the risk. When this goes down, I hope those brokers lose their licenses. Ignorance of this issue is no excuse. Corcoran is clearly apprised of the risk. Are they liable for misrepresentation?

And again, the NYTImes should be embarrassed that they are not covering an issue that only the Real Deal is covering. Any good reporter should be able to get the details as you did. Oh wait, they fired all the good reporters.

You don't actually need an offering plan to go to the AG's website to see who approved the plan for any new development.

I finally saw an open house here. Naturally a buy broker kept trying to poach a commission off me. (Not sure why she didn't realize that I came to an open house because I didn't want to talk to a broker, but whatever.)

Anyway, the common areas look pretty impressive, but too "open" at times. It definitely looks nice and it's HUGE. The footprint feels enormous. I think it has 4 elevator banks. Supposedly 70% sold. Pricey though.

alfamm: on this thread we are rather past discussion of amenities and logging the risk of losing your entire investment if the developer goes bankrupt. As you can see by the above articles, there is even a suggestion that the developer is so dishonest as to poach money from other projects to pay costs of Rushmore which would beg the question of whether the downpayments are even in the proper escrow accounts. Anyone interested in the building has a lot more issues to consider than the common areas.

As to 70%, who knows? According to the SE info, there are 94 apts sold, 61 in contract which would not be close to 70% if the info is accurate. In addition only 31 listed for sale. So where are the other 103?

With the last close on 3Y the $1000 psf floor just caved.

3Y below $1000 psf. The building will eventually sell out, but what's interesting is the market seems to be saying it should trade at a discount to Trump.

for now. and then as the rushmore starts to fill up, either because we've extended and pretended ourselves so far into the future or because some form of transfer has occurred and there are new owners, the downward price pressure will be felt in the trump buildings.

Extend and pretend refers to mortgage loan modifications. I don't see the connection between this practice and Real Estate prices on luxury condominiums.

you must be joking. commercial loans? it's all about defaults. unless you can tell me that there is no outstanding loans related to this project.

http://blogs.reuters.com/felix-salmon/2009/08/21/should-banks-extend-and-pretend/

the market seems to be saying it should trade at a discount to Trump.

Why wouldn't it? If the AG rules in favor of the buyers at Rushmore, they might walk -- or they might renegotiate for much lower prices. Either way it would put price pressure on the building and in the area. The recent buyers who must be thrilled to have a 20% (plus) discount might not be so thrilled that comp apts might be trading much lower than that in coming months. Lower sales prices put pressure on the service of the commercial debt = more risk, more pressure on prices.

It seems to me this recent rash of sales which must have taken place due to much lower prices (under $1000 psf?) might just be the developer anticipating an unfavorable ruling from the AG.

Avery apparently has an un-attended gym. Both Rushmore and Avery have no security staff , do not have access to p.s. 199 and consierably farther from upper west side. Assuming the A.G. issue is resolved, I would say 10% discount.

Prices are discounted 20% in the new closings. Are you sure the AG issue will be resolved in the buyers's favor ? How long should one wait to start a negotiation with Rushmore at this point. Anything else a potential buyer needs to be aware of when looking at this apt. Thanks for all the inputs. The discussions have really been very informative.

narayap, I think you should read this article from The Real Deal and then talk with you lawyer/investment professional about what it would mean to your investment if the buyers prevail in this lawsuit that the AG will rule on soon. Be sure to understand what would happen if the developer defaults on the commercial loans. When Extell ran into financial trouble on a building in Miami, they sold the apts in their luxury Brickell building for 50% discount. The buyers who paid full price - or later at a 20% discount-- will not recover their investment for decades, if ever. If this article is to be believed, it does not look good for Extell.

http://therealdeal.com/newyork/articles/gary-barnett-extell-faces-hud-probe-over-rushmore-complaints-from-andrew-cuomo

It's hard to imagine agreemetnts on closed units being voided. Extell's willingness to renegotiate existing contracts prior to closing will depend on the strenght of their position on each unit. Not all buyers are eequal(i.e. Those who reside in NY vs out of state). They'll probably also weigh keeping the depoit and reselling to someone else vs renegotiating the price. I can't Extell negotiating down as aggressively on a unit with a deposit vs one without a deposit.

narayap - one really important piece of advice. Do not believe a word that comes out of the mouths of the sales people. Especially do not believe things like how many investors there are in the building or percentage sold. All bold face lies. Make them write anything they say down and sign in. Better yet, make them show your lawyers documents that support their claims. In the offering plan, it says that it makes no representations on anything the sales staff says and that the only thing you can trust and hold liable is the contents of the offering plan.

Now, that said, page 95 of the offering plans says that if the first apartment does not close by 9/1/2008 buyers will have the right of rescission. As you know from the discussion board, over $100MM in units are suing/filed complaints with the AG to get this right promised in the contract, the only thing that buyers were suppose to rely on, and the Sponsor claims that what was indicated in the offering plan is a typo.

Other things you must consider include that 100+ units could go rental, your common charges could get hiked substantially, not to mention that it is zoned for a REALLY REALLY bad school(which even if it doesn't affect you personally, it will take a discount to your resale value. school report card - https://www.nystart.gov/publicweb-rc/2008/ea/AOR-2008-310300010191.pdf)

Maybe there is a price discount where buying an apartment in this project makes sense, but it would have to be a substantial one in my educated opinion. In sum, buyer beware.

Streetfan, you seem to be implying that units going rental increases common charges. That's not correct.

Riversider: If the AG rules in favor of those 34 buyers, their obligation to purchase at the Rushmore will be rescinded and they will get their deposits back. If Extell loses that suit because, as the above article suggests, Extell engaged in fraud (knowingly changing the dates on the documents) there is a lot more risk in this building. If prices plummet as a result, I'm sure there will be more law suits.

My take is that not all of the 34 want out and they are using this as a tactic to get a price reduction. Worst case, they need to resell some/all of 34 units.

Riversider - Your read on my post is incorrect. I am saying the following can happen:

1. Extell has the right (in offering plan) to rent out all the units as rental as long as 10% of the building is sold. they have 100+ units left to sell, with debt obligations, plus they are now in year 4 of sales. You do the math.

2. Each project is set up as a separate legal entity, Extell is currently paying the carrying cost (common charges + debt obligations) of the unsold units (again, now year 4 into carrying theses costs). Extell could just stop paying these common charges and make the existing buyers bear the brunt. It is an option open to them, and knowing all the problems Extell is facing (HUD probe, buyer lawsuits, other projects in trouble, Gary Barnett defaulting on a personal guarantee on interest payment of $80K (don't remember the exact number), as a buyer, you have to prepare for the worst.

Riversider - Your read on my post is incorrect. I am saying the following can happen:

1. Extell has the right (in offering plan) to rent out all the units as rental as long as 10% of the building is sold. they have 100+ units left to sell, with debt obligations, plus they are now in year 4 of sales. You do the math.

2. Each project is set up as a separate legal entity, Extell is currently paying the carrying cost (common charges + debt obligations) of the unsold units (again, now year 4 into carrying theses costs). Extell could just stop paying these common charges and make the existing buyers bear the brunt. It is an option open to them, and knowing all the problems Extell is facing (HUD probe, buyer lawsuits, other projects in trouble, Gary Barnett defaulting on a personal guarantee on interest payment of $80K (don't remember the exact number), as a buyer, you have to prepare for the worst.

as a buyer, you have to prepare for the worst
This I agree with. I do not expect a default, but do not discount it either. This is clearly not 2002/2003. As a buyer you have to consider a sold out buildings as the better option.

SEFan: It was $89K loan. Plus that Broome St. lawsuit claiming Extell unlawfully taking funds from Broome St. project to pay for Rushmore debts is alarming. Of course, it has not yet been proven so could be just a sour grapes lawsuit, but still..... If I had a deposit at the Rushmore, I would be shaking in my boots. I would want to see the escrow accounts.

Same kind of warning signs heralded what happened at One Madison. Developers in trouble, personally defaulting on (much larger) loans, their repeated assurances, people coming to developers defense saying it is all smoke, etc. Then bam. Lender files for foreclosure. The people who bought in One Madison have stressed out stomachs right now no matter how wealthy they are. No One wants that headache. If you have a deposit at Rushmore, you should be concerned.

Riversider: Maybe some of the 34 just wanted a discount but after you go through a lawsuit, are stonewalled and lied to by the developer, you might develop a very bad taste and not want to have anything to do with the building. And, if they negotiate for lower terms, I'm sure they will demand lower than the current 20% down just to accommodate their pain and suffering. It is a different market now and they can find other deals for high end apts.

Gee, what a gloomy thread. This lovely article from the Real Deal makes it sound like everything's going just swell up there! :)

Rushmore tops Corcoran Sunshine awards
February 22, 2010 11:30AM

By Candace Taylor

From left: Corcoran Sunshine's Kelly Kennedy Mack, Lynne Brown, Melissa Ziweslin, Graham Spearman, William Bish, Jim Brawders and the Rushmore
Corcoran Sunshine Marketing Group today announced the winners of its annual awards, with $1.6 billion in closed residential development sales in 2009.

"In one of the toughest years in real estate history, $1.6 billion is a significant number," Corcoran Sunshine President Kelly Kennedy Mack told The Real Deal.

The award for Sales Team of the Year was presented to Rushmore sales agents Lynne Brown, Jill Preschel, Graham Spearman, and Melissa Ziweslin, who closed over 100 unit sales at the project in 2009 and signed some $50 million in contracts during the fourth quarter alone.

More inventory was sold and closed at Extell Development's Rushmore condominium at 80 Riverside Boulevard in 2009 than at any other development in the Corcoran Sunshine portfolio, Mack said, adding that the team demonstrated "a Herculean effort."

Recent press reports about buyers attempting to get out of their contracts at the project haven't impeded sales, she said.

"Quite frankly, we've had an unbelievable year there," she said. "We haven't seen the kind of reaction from the buyers in contract, as well as new buyers, that many people have been speculating about."

Other winners include William Bish and Jim Brawders, who won the Deal of the Year for a sale at 15 Madison Square North negotiated in 2009, which closed last month, the company said in a statement.

The Corcoran Sunshine Innovation Award, for "strategic thinking, creativity, and insight" was presented to Nadia Meratla and Will Tims, both directors in the company's planning and design department. Brandon Watson was named Administrator of the Year for work at 166 Perry Street. The Judy Banham Memorial Award was presented to Marketing and Public Relations Coordinator John Felicetti in recognition of his "leadership, graciousness, and dedication," the company said.

James Lansill, a senior managing director, was presented with a one-time award for professional strength and leadership at Corcoran Sunshine.

Mack said the award was intended to honor Lansill's exemplary performance in the face of a difficult economy.

"It was such a challenging year for the industry, particularly for the new development market," she said. Lansill made "extraordinary" efforts at the projects he oversees for the group -- including Chelsea Enclave, Soho Mews and 166 Perry.

"James Lansill outperformed the market," she said.

http://therealdeal.com/newyork/articles/rushmore-sales-team-tops-corcoran-sunshine-marketing-group-awards

flatirony: Here is a question. Clearly these brokers read The Real Deal since they are supplying quotes for same. So, let's assume since they have a vested interest in the Rushmore, they have seen the article in the Real Deal about the AG's looming decision on the lawsuit. Do you think these brokers have a legal obligation to let their new buyers know that this could put the value of their apt at risk? . Or do you think that they say, like they said to me when I asked about the lawsuit, that it has no merit whatsoever and is nothing to worry about. If the AG does rule against Extell and the decision adversely affects the value of the recently sold apts, are these happy brokers liable for non disclosure issues?

apt23: on this thread we are rather past discussion of amenities and logging the risk of losing your entire investment if the developer goes bankrupt.

Right, but that's why I went to check it out to see how good/bad it was since there is a lot of armchair quarterbacking here. I'm not saying I would buy it... far from it. All I'm saying is: Based on what I saw, I wouldn't be surprised if some buyers who don't know Extell would buy it. Not everyone lurks on streeteasy and real estate sections of media.

Yes, alfamm, it is a nice building and they are apparently getting a lot of foreign investors. But clearly, there is some risk. And I am sure there are some wealthy people who are willing to take that risk. Hopefully they will be fully informed when they take the risk.

apt23 --

Don't count on the AG for a reasonable ruling. I'm a One Madison Park buyer . . . and the AG has taken some pretty unbelievable positions favoring the developers. Every seasoned developer's attorney I know has been shocked at what seem to be 180's on their historic positions.

The good news is our developers were so far over the line, that they are now in foreclosure which could clean things up . . . eventually.

Flatirony - what was the complaint to the AG's office regarding One Madison Park? Can you quickly summarize? Was it similar to that of the Rushmore?

It is why AG's should be banned from running for public office until after they have left that office for X years. Hope you do well with your purchase at One Madison. Has the lender contacted the buyers with their intentions/plans? If people have not closed can they back out due to the foreclosure or I suppose if your purchase was approved by the lender, you would be in for the long haul.

Streeteasyfan --

You can probably get the gruesome details at the 1 Madison Park string -- it's almost as long as this one.

Long story short -- the 1 Mad offering plan was a mess.

A major complaint was that the condo fees were significantly understated. There was a mistake in the offering plan and most of the amendments. Simply stated, total condo fees being charged to the units did not add up to the total operating budget. These two numbers should match. When that mistake was corrected (amendment 16) and all of the expenses were allocated, condo fees were suddenly 70% higher!

The second complaint related to the outside date. Long story short, the plan should state a specific date for first closing that matches the date of the first operating year. Not only did the plan not give a date (it specified only a month), that month didn't match the operating year . . . and it was inconsistent with a number of other date references in the plan. If you just look at the first operating year (which drives this element of the offering plan) -- the building did not make its required first closing date.

There are several more "anomolies", but I shan't bore you with them here!

any updates on the Rushmore?

Riverside612 - are you a buyer in the building?

I thinking of it, but not yet a buyer.

my guess is that if there were any updates, it would not be public info...

http://www.huffingtonpost.com/marta-hallowell/the-ny-times-the-daily-ne_b_505693.html

In two weeks the biggest real estate development in mid-town Manhattan since the creation of Lincoln Center will go before City Planning for approval. What? You haven't even heard of it?

That's because the Good Gray New York Times, The Daily News and the NY Post have hardly whispered a word about it. The World Trade Center site? All over it. Atlantic Yards? Ad nauseum. The largest remaining undeveloped plot of land near Lincoln Center, Columbus Circle and Central Park? Nada.

Oh wait! I think I hear the Gray Lady lifting her sleepy head off the desk. "Huh?" she snorts. "You mean the march of Soviet style architecture coming down the Hudson River from Trumpville? So what's new?" Yes, Good Gray Lady, the invasion will soon be complete. It will extend all the way to 59th St. And here's the catch - it won't just stretch down the riverfront, it will continue back two long city blocks to West End Ave. The biggest development in 50 years.

Let me see. Is there anything else the 4th estate in NYC might notice? Oh, yes. The site is being developed by Extell and its new partner, the Carlyle Group. (You know, the guys who just paid $20M to resolve their role in an influence-peddling scandal involving the state's pension fund.) And here comes the newsflash, boys: according to Extell's own admission at a presentation before Community Board 7 on Wed. night, they can only legally build 570 apartments on the remaining land (in addition to the 4500 or so already built north of it). The City figured, with input from the prestigious Natural Resources Defense Council and several community groups, that was plenty of density.

But Extell wants to build just a little bit more. How much more? Maybe 20 or 30%? Nope. Twice as much? Un-uh. Three times as much? No, Gray Lady & Co. Let me do the math for you. They're asking for nearly 5 times more space for apartments - amounting to at least 2,500, instead of 570. Because after all, we should reward for them for the overbuilding they've already done, right? And it doesn't end with 2500 more apartments. Then there's the auto dealership, the hotel and 1800 parking spaces.

Well, what do you think, Gray Lady & Friends? Time to wake up and wipe the drool off your mouths.

(In the interest of full disclosure: I live in the neighborhood adjacent to Extell's Riverside Center.)

April 09, 2010 3:31 PM
Extell told to release 41 buyers from condos New York Attorney General Andrew Cuomo says Extell Development must let the buyers out of their contracts for the Rushmore condominium.
By Theresa Agovino

Extell Development must release 41 buyers from their contracts to buy apartments at the pricey Rushmore condominium because it failed to meet the projected closing date in the offering plan, according to a ruling from New York's attorney general, sources say. The offering plan said it would offer refunds if the project was delayed.

The decision means Extell will be forced to return about $14.5 million in down payments and will lose around $105 million in apartment sales, one source says. However, Extell could appeal the decision.

At least 41 buyers filed complaints with state Attorney General Andrew Cuomo's office because their contracts said apartment closings would start in September 2008 but Extell missed the date. At least one person filed a lawsuit to have a deposit returned, but it was unclear if that person is included in the 41 letters that are being sent out.

Extell President Gary Barnett said in an interview with Crain's earlier this month that the date was just a typo and buyers were using it as an excuse to back out of their deals. He maintained that buyers only wanted out of their contracts because of the downturn in the residential and financial markets.

The ruling means the apartments will likely be resold for far less than they fetched in 2007 when the original contracts closed. It could also be a major disappointment to brokers who sold the apartments as they may lose out on commissions.

Mr. Barnett and the attorney general's spokesperson were not immediately available for comment.

Weeks ago, the buyers' attorney outlined some of the fraudulent paper shuffling that Extell undertook to avoid giving back these deposits. I hope Extell had to pay all attorney fees of the buyers. Why would you buy from a developer who actively engages in fraud -- and has now been caught. There is another lawsuit against Barnett by a former partner in a development who claimed that Barnett stole money from the partnership to pay Rushmore bills. Just like this "typo" suit, Barnett said the case has no merit. I think that the Rushmore buyers might be finding shortcuts, shortcomings and the after effects of die hard fraud at The Rushmore for years to come. If the guy is stealing money from his partner to cover expenses at The Rushmore, why would you invest with him. I think Barnett will not be the only Rat exposed at The Rushmore.

Well profit margin on Rushmore is shot. I be some of these buyers receive and accept offers to renegotiate. They won't all walk

If you spent the last year or more filing charges with an attorney, running up costs, and then find yourself being stonewalled and lied to not just by a developer but by an entire law firm working for the developer, you may be too enraged to renegotiate. Certainly you wouldn't settle for the current price of 20% off that other buyers getting. Plus, if you have had months of first hand knowledge of the fraud perpetrated by this developer why would you get into bed with him again. And how pissed off would you be knowing that because the developer didn't give the money back when it was due, you missed the biggest upside in the stock market in decades.

I wouldn't be surprised if these buyers weren't banding together to sue the law firm that created the fraudulent "typo". If the buyers' attorney is to believed -- and he just got a lot of credibility with this AG judgement-- the fraud and cover up by the law firm is pretty devastating. This is also another black eye for the Carlyle Group.

And shame on the NY Times for not covering this story. Their real estate pages are bought and paid for by the Extell and they don't seem to care if the fair citizens of NY get taken by this thief as long as they get their ad revenue.

apt23, I think the bar would be set much higher. Can't see this being successful.

http://online.wsj.com/article/SB10001424052702304703104575174401255851196.html?mod=WSJ_Commercial_sections_RealEstate

A long-simmering dispute between Extell Development Co. and individuals who agreed to buy condominiums in one of the developer's new luxury Manhattan buildings ended Friday when the New York Attorney General ordered Extell to refund $15 million in down payments.

The ruling is a setback for the New York-based developer, which stands to lose more than $100 million in apartment sales, according to person familiar with the matter.

It is also a potential embarrassment for the white-shoe law firm Stroock & Stroock & Lavan, which prepared the offering plan for the building. The plan included a mistake that contributed to the ruling in favor of the buyers.

So now Extell has to sell most of the apartments of Rushmore at the same time they are completing 60 Riverside (the Aldyn). That's going to be fun for them! BTW - anybody know what is going on with 60 Riverside? It looks like it is getting close to done.

As I said 7 weeks ago this decision was made months ago. The AG gave the developer the chance to do the right thing but they did not. This place as I have said several times will be rental or bankrupt by September.

Still , I was a little surprised..

http://therealdeal.com/newyork/articles/real-estate-developers-like-the-durst-organization-and-extell-development-use-llcs-to-give-big-bucks-to-gubernatorial-candidates-like-andrew-cuomo-and-david-paterson

A $47,000 donation is not going to get you a 100 million dollar decision.

nyc2009: This place as I have said several times will be rental or bankrupt by September.

Is this just supposition or do you have specific information. You were certainly correct about the AG decision. Given the other lawsuit by a former Barnett partner that contends that Barnett was syphoning off money illegally from another project to pay Rushmore bills, do you think they have to cash for the rescission?

bump

The money for the deposits is in escrow and has nothing to do with Extell's finances. Everyone will get their deposit back with no problem as long as they have a good lawyer and their paperwork is in order. As for the building moving forward with sales we will have to see. Think about it. They just lost between one third to half of their total sales depending on who you listen to. In this market that is between 1 and 2 years of sales. Stevie Wonder can see what is going to happen now.

There is just so much risk in this building now I think the only way you buy is if you are supremely confident you are getting a big discount to current market. Who knows what the closest comparable unit paid. They haven't lowered prices and are just trying to get as much money for each apartment as possible, so who knows if you are paying a fair price? relative value is all out of whack. some paid full price, some investors got a discount, now who knows what new buyers get. Acris shows closing price, but who knows what additional incentives were offered. And what if some investor comes in a buys a huge block at a big time discount? And who knows what happens to common charges? Estimates already seemed artificially low. They are probably burning through the reserve right now. Certainly can't trust them to not do that after what they have tried to pull.

What percnetage of units have actually closed?

ACRIS shows 115 closings, so ~40% depending upon how many you count as total, 289 or for combined units 0f 270. Way less than the ~70% they've been telling people for over a year.

Interesting. And the first closings are soon at the one year mark. They'll be competing with resales soon. Optimistically, it will take them three years to sell out.

Someone should call and get a comment from those idiot sales people at Corcoran that got awards for sales in this building.

Sales started over 3 1/2 years ago! 3 years is optimistic.

who knows streeteasyaddict

i looked at several apartments in the building yesterday and i'm in the process of making an offer. One of the corcoran sales people just told me that the building was 80% sold, 60% occupied and that Extell was in excellent financial condition. what type of liability could corcoran have for making such outrageous misrepresentations?

Shoot them an email and ask them to what the stats are again, see if they give it to you in writing. Then ask their lawyers the same question. Also ask how many units are actually closed, no "sold". Gary probably "bought" a bunch of units himself.

Barnett was quoted as saying 50% in an article, they should really get their story straight.

This is an operating building, don't close anything unless they show you financials.

what discounts are they offering?

I'm not understanding how you are "in the process of making an offer" while at the same time being concerned about "liability Corcoran could have for making such outrageous misrepresentations." If you believer they are making outrageous misrepresentations why in the world would you make an offer?

Buyers will be waiting a long time for their money....

http://therealdeal.com/newyork/articles/rushmore-carlyle-realty-partners-and-extell-development-or-crp-extell-set-to-challenge-ag-ruling-in-rescission-case

In a letter to state Supreme Court Judge Debra James, lawyers for the sponsor, CRP/Extell, said they plan to file a so-called Article 78 that will challenge the AG ruling, and continue to argue that the disputed Sept. 1, 2008 rescission date was a "typographical error," that should have been excused.

Article 78 provides an opportunity for anyone (developers, citizens, community groups, even other federal, state, or local agencies) to challenge decisions made by approving agencies or government or municipal officers.

These challenges are not made against you as owner or developer, but rather against the reviewing board or agency, which is typically the lead agency under the State Environmental Quality Review (SEQR) Act. An Article 78 can be used if one of these allegations is made:

* An agency or official failed to perform their required duties.

* An agency or official proceeded without, or in excess of, legal authority.

* The decision was arbitrary, capricious, or an abuse of discretion.

* The decision was not supported by substantial evidence.

Question is how does this affect Extell's reputation and ability to attract new buyers?

Why would anyone every do business with these guys now? They absolutely know they have no chance of winning this, it is just a further attempt to screw their customers.

"The letter was in response to a demand by lawyers for Rushmore buyer Kelly Coffey to get documents and other evidence from CRP/Extell. Coffey, a managing director at JPMorgan Chase, is not one of the 41 buyers that complained to the AG, but filed a lawsuit in state Supreme Court seeking a return of her deposit."

This is just a cover so Extell doesn't have to release more papers that might reveal fraud. Also, it is a stalling tactic so they can continue to sell apts as soon as possible before potential fraud charges drive buyers away or prices fall after the 41 buyers walk away.

It is amazing that Corcoran can lie to potential buyers with impunity.

Remember when Donald Trump was building 300 Riverside South and the concrete was so defective that whole floors had to be ripped down? And he had to change the name? Did that stop people from buying there?

Sounds like they had a problem and fixed it, instead of trying to cover it up like these guys

still, 30 yrs point is a good one. there are a lot of issues here . in this environment, why would you buy at a building that has economic issues and well as possible fraud. especially at these prices. i could see an investor taking a leap if they could get a bulk rate but we are far, far from that scenario. yet, people put on the blinders and dive in. i would never buy at a building with defective concrete based on the one cockroach theory. Unless....... I didn't know about it and corcoran seems determined to keep info from buyers.

I saw a few units today. Was told the building is 70% sold but only 45% units closed. The building is nice but overpriced in my opinion. I only bump into 2 people who seem to be living there during my 45 min visit. The sales person claimed that most owners are not full time residents. Very strange...

Wingman99

Attached is a Read Deal article summarizing the significant litigation the building is involved in.

http://therealdeal.com/newyork/articles/extell-and-gary-barnett-and-carlyle-appealing-ag-refund-ruling-at-rushmore-from-attorney-general-andrew-cuomo

I would be highly skeptical of any representations made by the sales staff regarding sales, or for that matter anything important. Your observations on the building being overpriced and the lack of "observable" tenants should be a red flag. The apparent desperation of Extell suing its primary regulator, the Attorney General of the State of New York, on constitutional grounds could signal some serious questions about the financial viability of this project and maybe even Extell itself.

Agree with nyalman - seems like an 'all in' move to me. Not a smart move, but a very emotional one by Barnett. One of an egotistical man who thinks nothing can touch him..until it does.

"I saw a few units today. Was told the building is 70% sold but only 45% units closed."

I know everyone thinks Barnett is crazy for dragging this out, but it may be part of a calculated strategy that's been ongoing. As it stands, the building is "over 50% sold", which works as a marketing ploy, and allows financing for the building from places that requires 50%-sold status.

I am guessing at this point that even if the in-litigation contracts go away, they're still be able to claim over 50% sold. However, this was probably not the case a year ago. Hence, by playing this dragging-out game, they've been able to make the project financeable. Now, if they let the litigators go away, they'll probably still be at 50-55% sold. That's kinda close to the margin financing-wise: a few cancelled contracts would be dangerous, maybe those bought by insiders don't count. But "70%-sold" is solid financing-wise and marketing-wise.

Hence, you spend an extra $100K on BS litigation to keep the shell game of % sold moving.

one thing I don't understand is why the common charge seems so low compared to other building with similar facilities. I asked the sales person if those numbers can go up substantially in the future but cannot get a solid answer...

of course common charges will go up. anyone who says it won't - they are lying. just do the math - 50% of the building not occupied - who long do you think Barnett will pay for the charges on those units. and don't let the "it's in the contract that sponsor will pay for CC on unsold units" fool you. It's also in the contract that buyers had the right of rescission and now Barnett is suing buyers in federal court to dodge his own contract. Run, don't walk, from this building.

And to take that thought a step further, anyone who is that sketchy in business, how can you really trust the product? do we really know what types of material this guy used? who knows what he did to cut costs behind all that glitzy decor? When a developer has no ethics or integrity, you can't trust anything he do or say.

This looks like the first resale in the Rushmore, 2.4% above 9/09 sponsor sale and basically on top of where the downstairs neighbor sponsor sale closed in May 2010.

http://streeteasy.com/nyc/sale/471293-condo-80-riverside-boulevard-lincoln-square-new-york
09/22/2009 Previous Sale recorded for $5,854,937.
10/15/2009 Listed by Prudential Elliman at $7,300,000.
02/27/2010 Price decreased by 5% to $6,900,000.
03/01/2010 Price decreased by 6% to $6,495,000.
03/06/2010 Price increased by 7% to $6,950,000.
04/16/2010 Price decreased by 2% to $6,795,000.
08/12/2010 Listing sold.
08/12/2010 Sale recorded for $5,995,000.

05/10/2010 #7BL $5,956,762

In other news, closings continue to inch toward 50%. I count 140 out of 289 units closed. After a fairly strong spring (and even June, which had only 5 units but almost $22mm of purchase price and some BIG ppsf numbers), closings have basically stopped for the summer - none reported in July, three in August to date. Yes, it's summer, etc., etc., but this pace is still noticeably slower than some other buildings like the Laurel or Georgica. It will be interesting to see if the pace of closings comes back in the fall, and if not whether prices have to move meaningfully to get the process moving again.

when you consider that dolly is certainly not one to lower her commission, transactional costs at this price range get steep. so seller still lost close to $500,000 which has got to hurt no matter what your wealth level. And $1370 psf for a 6 bedroom new condo w/tax abatement is considerably lower than developers intention. Little wonder that Carlyle Group is no longer funding Extell projects.

what's going on with the suit? any word?

Apt23, Carlyle is not an equity investor in Aldyn?

Sideline, Extell and Corcoran pulled out all the stops. I recall seeing something to the effect that Corcoran agents were paid the highest commission to steer clients to Rushmore. If true certainly at the expense of other business.

Resales are obviously not doing well as evidenced by most recent sale. With Aldyn coming on line it may even put more pressure on prices. Since the building targeted foreign buyers in their last big marketing push (during the lawsuit), this does not bode well. Hard to tout the building as an investment when rental rates are so low and resales show huge losses. The buyer of 14B lost close to a million dollars when you consider transaction costs in this sale:

09/11/2007
Previously Listed by Corcoran at $3,550,000.
02/07/2008
Corcoran Listing sold.
03/10/2009
Listed by Corcoran at $3,550,000.
04/16/2009
Listing sold.
08/07/2009
Sale recorded for $3,614,787.
09/08/2010
Sale recorded for $3,050,000.

This transaction seems less about the real market and more about the curious intricacies of Korean business culture. Of course I have no idea what lies beyond the facade of this deal, I just can't help but look at it without a heightened level of skepticism.

spin - i have to say i have no idea what you're talking about and I think it's a simpler story than an intricate cultural theory. It was surely comped to the April 2010 sponsor sale of the upstairs neighbor (no Koreans involved in that one, btw).

04/20/2010 #15B $3,060,000 -15.0% $3,600,000

Not sure about the $1mm loss estimate. Loss on headline price was $565k. The sponsor sale price of $3,614,787 included buyer-paid closing costs. On the resale, what would broker fee have been - maybe 5% on a $3mm apt? Not more. Call it $150k. $700k area might be a better guess than $1mm. Not that this is much comfort to the seller.

Codboat - A Korean lawyer selling to a Korean investment interest doesn't raise suspicions to you about arms length?