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Chetrit & Bistricer Abandon Luxury Condo Transformation for Sony Building

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The Sony Tower (also Sony Plaza, formerly the AT&T Building), is an iconic postmodern 647-foot-tall (197-meter), 37-story highrise skyscraper located at 550 Madison Avenue between 55th Street and 56th Street in Manhattan. (Credit: Wikipedia)
Joseph Chetrit (left) and his partner, David Bistricer (right) abandoned their plans to transform the Sony Tower into luxury apartments.

Three years ago, developer Joseph Chetrit purchase the Sony Building at 550 Madison Avenue for $1.1 billion, when luxury apartments for billionaires was the craze in Manhattan.

Infamous architect Robert A. M. Stern was employed by Chetrit to convert the 37 floor office building, located between 55th and 56th Streets, into residential apartments, with eight floors reserved for a five-star hotel by an international hotel group. Plans to build a $150 million triplex penthouse with a marble staircase were also filed by Chetrit.

Last week, in line with the luxury real estate decline, Chetrit decided to abandon his plans of residential transformations and signed a deal to sell the Sony Building for $1.4 billion to the Olayan Group, which is run by a Saudi family, and Chelsfield, which manages its properties. They will stick with keeping the property as office space.

Chetrit and his partner, David Bistricer, owed $925 million in short-term loans on the property that they were pressured to pay back. The pair also faced difficulties in getting a construction loan due to the decline in the market for high priced apartments making lenders wary.

According to a New York Times report, “Mr. Bistricer said he and Mr. Chetrit were prohibited from talking about the deal until the sale closed at the end of May.

‘It was providential,’ said Nancy Packes, a consultant for luxury residential projects, that Mr. Chetrit was able to find a cash-rich buyer for the building. Over the past three years, she said, the market for billionaire apartment buyers has gone from ‘mush to ice.’

‘Even breaking even is a win,’ added Ms. Packes, who was not working on the 550 Madison project.

It was unclear how much money the partners made. Estimated interest payments for the building totaled $180 million over three years, and property taxes for that period came to nearly $45 million, according to public records. Some of those costs were covered by the rent Sony paid to continue to occupy the building. The company recently moved.

The partners also presumably had to pay millions of dollars for lawyers, architectural plans and the marketing firm for the project.”

Philip Johnson designed the tower as the AT&T headquarters in the 1980s. In 2002, Sony purchased the building from AT&T for around $236 million.

The billionaire residential market was at its peak in 2013 when Sony put the tower up for sale. Other commercial developers were outbid by Chetrit’s $1.1 billion offer. As Chetrit and Bistricer started planning the building’s transformations, Sony continued to rent the space for three years as they searched for a new location.

The Times reported, “In 2015, they said that they would build 96 apartments on Floors 14 through 35, designed by Mr. Stern. The units started at $11 million and went up to $150 million for the 21,500-square-foot penthouse, which had served as a corporate boardroom. The Oetker Collection, which includes hotels like Le Bristol in Paris, was brought in to create the eight-floor, 170-room hotel, which would have also been designed by Mr. Stern. …

But Mr. Bistricer, while not addressing 550 Madison directly, said the situation was not so dire. Contrary to most developers and real estate executives, there is ‘no shortage of money for big projects,’ he said. ‘You put together the right sponsors, the right banks, you’ll find financing.’”

Charles Bernstein

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