The Dark Side of Real Estate – Part 6

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Sharif El-Gamal had merged two zoning lots located at 45 Park Place, where he then planned to build an Islamic cultural center and a 43- story condominium. Photo Credit: PBS.org
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By: Raz Shamay

Sharif El-Gamal  – The Man Who Wanted to Build a Mosque on the 9/11 Site 

Accusations of scheming and illegal loans go against the 45 Park Place developer.

Developer Sharif  El-Gamal is warning his lender that he will rip the top of his 667-foot condo tower in Tribeca if foreclosure takes action. This is devaluing the project, which stemmed from a strategy in 2016. El-Gamal had merged two zoning lots located at 45 Park Place, where he then planned to build an Islamic cultural center and a 43- story condominium. This location just happens to be located at ground zero; the infamous site of the 9/11 attacks on the World Trade Center. This gave El-Gamal air rights, where he then presented to build the museum one-third taller than the city permits. The project had many drawbacks that lead to his lenders cutting off funding and is to move to foreclosure. El-Gamal has fired back with the warning that air rights could vanish,  according to a NY Times report.

In July 2009, Soho Properties purchased property at 45–47 Park Place, located adjacent to the World Trade Center site. Photo Credit: multihousingnews.com

But who is this murky figure named Sharif El-Gamal?  Born in Brooklyn in 1973, El-Gamal first entered real estate in the late 1990s as a residential sales broker but within his first year transitioned to commercial real estate sales, according to a Wikipedia report. In 2002 he received his real estate broker’s license.

According to the company’s website, El-Gamal founded his real estate company Soho Properties in 2003 in order “to focus on commercial real estate capital markets, advisory and retail leasing.”

El-Gamal’s partners in the business are his brother, Sammy El-Gamal, and Nour Mousa.

In 2007, El-Gamal bought six apartments building in the Harlem and Washington Heights neighborhoods of Manhattan. He managed additional properties in Chelsea and Harlem. In July 2009, Soho Properties purchased property at 45–47 Park Place, located adjacent to the World Trade Center site.

In November 2009, Soho Properties purchased a 12-story office building located at 31 West 27th Street for $45.7 million. El-Gamal said, “We just bought it for the income. It’s got great long-term leases, and the financing was really attractive. We have five years at a very attractive interest rate, and it’s probably the best B building in this submarket.” Soho Properties purchased it from the Witkoff Group, which had purchased the building in 2006 for $31.5 million. Soho Properties sold the property to the San Francisco-based Walnut Hill Group in 2012 for $65 million.

In February 2014, El-Gamal announced a partnership to build a new home for the 83-year-old Garment Center Synagogue in Manhattan, as part of a 29-story retail center and hotel at 560 Seventh Avenue. El-Gamal said, “We’re in the process of buying one of the last untouched corners of Times Square… with an opportunity to secure the future of a synagogue that will serve the Jewish community for decades to come.” In 2018, Soho Properties announced that this project would be the Margaritaville Resort Times Square.

In May 2016, Soho Properties announced that it had secured $219 million in construction financing for 45 Park Place, a 43-story luxury condominium development. The financing structure, involving banks from the Middle East, Asia and Europe, is Sharia-compliant. El-Gamal said, “Essentially, it’s the largest syndicated Sharia-compliant construction loan in New York City.”

Adjacent to 45 Park Place at 49–51 Park Place, Soho Properties is constructing a three-story museum and sanctuary designed by architect Jean Nouvel.

Park51

During February of this year, attorneys wrote to the owner of the condo tower warning to retract the zoning-lot merger if the lender does not make the funds available to complete the project. In a response letter, the lending group made accusations of El-Gamal scheming and “leveraging in negotiations”, where they made it clear to Malaysia’s Malayan Banking Berhad, Kuwait-based Warba Bank, and to a consulting investment firm, MSD Partners, that he would be legally responsible for all damages done to the building. Attorneys made it clear that 40,000 square feet were to be taken, causing 15 floors of the almost done condo illegal.

The lending group made accusations of El-Gamal scheming and “leveraging in negotiations”, where they made it clear to Malaysia’s Malayan Banking Berhad, Kuwait-based Warba Bank, and to a consulting investment firm, MSD Partners, that he would be legally responsible for all damages done to the building. Photo Credit: warbabank.com

El-Gamal’s threats were proven correct when he signed on October 16th as the president of the entity, four months before he sent the letter. The developer acknowledges the fact that he had been president of the sites LLC only once, but refutes having any control over the site of the culture. He continues to add that he intends to complete the project. The opponents had gotten a judge to side with them on removing the 20 floors earlier in the year, showing El-Gamal’s threat to take down a condo tower is nothing new. “I did not send that letter. I never threatened to invalidate the [zoning agreement]. Those assertions that are being made are not supported by the facts,” says El-Gamal, seen in The Real Deal.

Numerous luxury condos throughout the city failed to peak in 2015, records show that El-Gamal’s issues arose at 45th Park Place over quite some time. As 2017 sales were set in motion, only 11 of the 50 units in the condo were proven in a contract. The website for 45 Park Place shows off the three-bedroom on the 38th floor, set to be the highest priced unit, going for $12.35 million. It also includes El-Gamal himself, along with the interior designer and architects, but with the ongoing surge of the pandemic, finding consumers can be difficult.

Corcoran Sunshine Group took over the sales from Stribling & Associates after they parted ways with El-Gamal in 2017. The available unit listings on the tower’s website has no active listings. Many condos, including 45 Park Place, are suffering from the coronavirus outbreak, as well as buyers having to change their real estate plans. Many foreclosures and project changes are expected to come says Stephen Kliegerman, president of Halstead Development Marketing.

Stephen Kliegerman says in The Real Deal – “ Unfortunately, out of any economic crisis there are foreclosures and there is distress in the construction and new-development marketplace. I do think there will be some projects — particularly those that have been troubled pre-COVID — that are certainly looking at more difficult times ahead.”

The cultural center’s progress has been sluggish as proposals were filed in 2017 and the Department of Buildings reported that zoning approval is still pending. Evidence of El-Gamal’s failure to pay back the overdue amount of $108 million along with many other violations adding up to this outstanding balance. El-Gamal’s lender in early March filed to have 45 Park Place foreclosed before the shutdown of the state. Other claims about falling short of sales and signed contracts that were supposed to total up to 120 % of what the construction loan price was supposed to be.

The lender added that El-Gamal had acquired an illegal mezzanine loan for $62 million back in 2016 on the property. $10 million were required to liquidate in order to keep the loan and later, he had been proven to be responsible for delays in construction. On top of the illegal loan, he had planned later to receive another loan that was between $170 million to $190 million from Madison Realty Capital, which later had been found to fall through, a writer from The Real Deal  says.

45 Park Place has had a handful of complications and last year El-Gamal’s contractor Gilbane Building Company argued that he was delayed payment of $10 million. Justice Francis A. Kahn III chose a short-term individual to control the property back in March. In December, Meritz Financial Group gave El-Gamal firms a refinancing obligation for $200 million, and El-Gamal says he is pushing to close the deal, but unsure of when that will occur.

Malaysian Fugitive Jho Low

Interested in purchasing property worth $100 million recently owned by a criminal?

The Viceroy L’Ermitage Beverly Hills is a boutique hotel located in Hollywood and is currently for sale, with an asking price of $100+ million. It includes 116 rooms, a rooftop pool, and a jet-setting clientele. If interested, all you need to do is contact the U.S. government. Even with the pandemic coursing, the Viceroy L’Ermitage Beverly Hills is for sale.

In 2016, the hotel was to be taken in possession of prosecutors who had been orchestrating an investigation for foreign bribery and kleptocracy. A New York Times report indicates that more than $2.5 billion was looted from a Malaysian sovereign wealth fund. Authorities seized the property from a fugitive, Jho Low, who was wanted both in the U.S. and Malaysia for a ploy to capture the prime minister and Goldman Sachs Wall Street’s banks. Low then used the money to purchase one of a kind Van Gogh paintings along with other extravagant items such as a see-through grand piano.

Mr. Low’s remaining properties are to be sold and auctioned off by the federal government. The proceeds are then going to both the U.S. and Malaysia governments, splitting it half and half. Los Angeles and Washington authorities hope to auction it for $100 million this summer. An overnight stay charges for about $600 on a nightly average. The rooms are advertised to be the “home-away-from-home” experience, catering to Hollywood’s upper class and “international dignitaries.” The question is how competitive will offers remain, especially with the future of sightseers to be low due to the ongoing pandemic.

In November 2009, Soho Properties purchased a 12-story office building located at 31 West 27th Street for $45.7 million

The surge of COVID-19 is affecting plans to reopen all businesses, and although some hotels thought they were getting their chance for a comeback, lockdown orders were widely reinstated. Michael M. Eidelman, a bankruptcy lawyer in Chicago who specializes in mass auctions such as this, says, “Luxury hotels in Beverly Hills don’t often come up for sale. We have received inquiries from a number of different groups, and groups from a number of different countries.”

Hit hard during this time, luxury estates are at a low occupancy with levels at 9% and below. This is because most have had to close due to the underlying circumstances, while the industry’s occupancy has been conducting at 40% Fitch Ratings reports. STR, a hospitality firm, didn’t expect owner-occupancy to rise before 2023 pre-pandemic. Blackstone Group, a well-known equity firm missed a payment loan of $274 million to four hotels, coming out later to state that financial troubles have been bubbling before the pandemic started. Tom Barrack’s Colony Capital came out for having a $3.2 billion debt for over 245 hotels.

A New York Times report indicates that more than $2.5 billion was looted from a Malaysian sovereign wealth fund. Authorities seized the property from a fugitive, Jho Low, who was wanted both in the U.S. and Malaysia for a ploy to capture the prime minister and Goldman Sachs Wall Street’s banks. Photo Credit: AP

The New York Times talks about how federal authorities are ready to wrap up a five-year investigation one of history’s most well-known and complex kleptocracy cases. This case lead to opening other investigations such as the foreign bribery of Goldman Sachs. Tim Leissner was a banker for Goldman and immediately pled guilty, saying how he, along with others planned to work with Mr. Low. They planned to pay off officials in Malaysia and in return would control bonds in the country that increased money to invest in infrastructure projects. Kimora Lee Simmons, Mr. Leissner’s wife, agreed to relinquish $43.7 million. The bank and two dozen employees have been prosecuted for fraud in Malaysia, lobbying at the top of the Justice Department in order to settle and avoid entering a guilty plea for felony charges. Although Mr. Low never appeared in court, his lawyers have stated he did nothing wrong, according to Mr. Low himself.

Mr. Low, who is believed to be residing in China, had him and his associates in October to give up all claims to the seized property. His share in the EMI portfolio in 2018 went for $415 million to Sony and his shares in Park Lane Hotel was sold for $139 million. So far $500 million was reported to be returned to Malaysia and its people, and more are still looking to be found. The Justice Department on Wednesday had sought out $96 million in cash and property which included two Andy Warhol paintings, accounts in Luxembourg and Switzerland. Malaysia collected $126 million from the sale of a superyacht, 300-foot vessel, and 11 guest cabins.

The government as well took hold of millions of dollars in cash and jewelry. In 2010, Mr. Low had acquired the Viceroy L’Ermitage for $40 million, and then later spent just as much on renovating it. The sale for the Viceroy L’Ermitage had begun last month with Mr. Eidlman, a broker who set a minimum price to avoid foolish buyers. The buyer will have the right to remove any type of management contract which belonged to Viceroy. The sale of the Viceroy L’Ermitage could be a beacon of hope for other luxury properties trying to sell during the pandemic.

The Viceroy L’Ermitage Beverly Hills is a boutique hotel located in Hollywood and is currently for sale, with an asking price of $100+ million. It includes 116 rooms, a rooftop pool, and a jet-setting clientele. Photo Credit: tripexpert.com

New York’s most exclusive hotel, the Mark Hotel in Manhattan was able to fend off attempts of forced foreclosure after missing an interest payment loan for $35 million. A temporary block was put by a New York Judge who said that a small creditor was pushing to take full control of the hotel worth by taking advantage of the pandemic. Before the judge opened the sale, the lender showed interest in bidding for the Mark Hotel.

Stephen Boyd believes that if the country continues on the path of reopening, grandeur hotels will hopefully have fast rebounds for business.

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