Clarett, Goldman Lose Control of Forte
Not everything Goldman Sachs touches turns to gold. A multi-million-dollar bet on the Fort Greene condo market appears to have backfired, with the Crain’s report yesterday that control of the Forté Condos at 230 Ashland Place would shift from Goldman, the 75 percent equity holder, and The Clarett Group, the developer, to the lender, Eurohypo…
Not everything Goldman Sachs touches turns to gold. A multi-million-dollar bet on the Fort Greene condo market appears to have backfired, with the Crain’s report yesterday that control of the Forté Condos at 230 Ashland Place would shift from Goldman, the 75 percent equity holder, and The Clarett Group, the developer, to the lender, Eurohypo Bank, which is into the project for $41 million. (Prudential Real Estate Investors also has a small equity stake.) Clarett is proud to have delivered such a beautiful, high quality property—on time and on budget—to enhance the skyline and contribute to the renaissance of downtown Brooklyn, the developer said, in a statement. Unfortunately, the sales market in Brooklyn has not been as strong as Forté itself. A last-ditch marketing makeover by The Developers Group in recent months as well as behind-the-scenes efforts to sell blocks of apartments apparently weren’t enough to save the equity investors, as the project was less than 40 percent sold after two years on the market. Clarett’s nearby project on Lawrence Street, the 51-story Brooklyner, is still expected to begin renting early next year.
Goldman Sachs’ Brooklyn Condo Bet Sours [Crain’s] GMAP
“Eurohypo”
How appropriate. The Europeans were buying up all the RE in NYC. You couldn’t lose.
Aw man, this story is great. I can’t wait to read the rest of it.
Welcome back ROTW!!!
***Bid half off peak comps***
the floor plans are horriffic. I looked at all of them and tried to figure out where furniture for a regular working person would go. Couch facing TV….ummm, a kitchen table in the kitchen would be nice, not in the living room. A bathroom window would be great…..oh, and how is one to clean the windows anyway? What good is a view if they are dirty.
BO – I do not know what you saw, nor do I know the size, location or quality of the studios you saw – but the market would have to fall siginifcantly for a new doorman/elevator building in downtown Brooklyn to rent for $25 a sq ft; and if it does – the owners (GS or whoever) and many other LL in NYC will be crushed.
Time will tell.
FSRQ I saw the pricing sheet. Studios will be priced at 1400 as of now. I dont think you guys understand GS owned 75 percent of this project
Bkre;
I can’t speak for Hypo. What I can say is that they have a semi-toxic asset on their hand: a building that is only 40% sold after two years of marketing, in a non-prime part of DT in a real estate recession.
My guess is that they are looking at two options:
-sell the unsold units as a block at a deep discount to a rental operator, and get it off their books.
-finance the sale to individual owners at a deep discount to move the inventory. This option effectively “morphs” the current loan into many mortgages to individual owners.
Either way they are going to take a hit. I suppose that their best brains are crunching the numbers and trying to figure out the most likely scenario for taking the smallest hit.
BO – they topped out the Brooklyner (111 Livingston) about two mo ago – the apartments arent listed yet so wtf are you talking about.
I would guess that one brooklyn will do the same before the new year
We already know that antidope is smarter than GS in one respect. antidope didn’t invest $10 million of equity on a ovepriced highrise on the edge of fort green. GS did. So there’s at least one situation in which antidope was smarter than GS. Are you saying it couldn’t happen again?
Also – once GS’s equity is wiped out, that frees up Euro HYpo to sell it at market rates. GS needed to earn a return on their equity. Euro Hyps just neads to cover their exposure. It’s a much different incentive.
I’m sorry did I miss something BO? Is there a senior lender in front of Hypo, like GS had? Have you ever seen the right hand side of a balance sheet?