Sutton Place Developer Risked It All And Lost
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Joe Beninati, the developer behind the troubled Sutton Place supertall, had hoped the project would establish him as one of New York’s real estate heavyweights.
Joe had only a series of relatively small projects in Connecticut under his belt last year, when he bought three apartment buildings on East 58th St to lay the groundwork for his planned 1,000-foot tower.
Eager to get the ball rolling, Joe took a big risk: he borrowed $147M at a 30% interest rate from Gamma Real Estate, a lender with a track record of playing hardball when its terms aren’t met, Crain’s reports. Joe turned down offers from top builders like DDG and CIM Group to partner on the project.
After a string of complications and over-budget spending, Joe’s Bauhouse Group was unable to keep the momentum going and defaulted on the Gamma loan. The lender might’ve been banking on that all along, Crain's reports, especially given onerous terms like the $45M “exit fee” tucked into the contract.
Joe has since filed for bankruptcy and is suing Gamma, alleging the lender improperly tried to meddle in the foreclosure bidding process to snatch the development for itself.
For now, Gamma’s foreclosure has been staved off by the bankruptcy, and it remains to be seen how the various lawsuits surrounding the property will shake out. [Crain’s]