http://therealdeal.com/issues_articl...-new-ballgame/
January 01, 2014
By Katherine Clarke
Quote:
.....Two years later, McCourt is making headlines for different reasons.
In August, his real estate firm acquired a development site on Manhattan’s Far West Side for $167 million. That was more than triple the price paid for the site in 2011 by the previous owners, a partnership between Sherwood Equities and Long Wharf Real Estate Partners.
The deal is McCourt’s first major commercial transaction since the 2012 sale of the Dodgers for $2.15 billion — and his first-ever in New York.
.....McCourt Partners — a joint-venture between McCourt Global, a company formed in 2007 by McCourt with his sons Drew and Travis, and financial services firm Guggenheim Partners, which now co-owns the Dodgers — is armed with more than $550 million in assets and capital. It’s recruited a team in New York and plans on making more strategic investments in Manhattan in the coming months, McCourt told The Real Deal.
Sherwood CEO Jeffrey Katz said McCourt chose his first New York property wisely, adding that he was smart to get on the industry’s radar.
“You come to New York, you want to have a presence. If you buy a mid-block infill site on the Upper East Side to build a 12-story apartment house, it’s hardly noticeable,” Katz said. “This will be very high-profile and will get him into the deal stream. People want to do business with people who are active.”
.....McCourt decided New York should be the global headquarters for his new fund, inking a deal for his 10,000-square-foot Manhattan office early last year.
“From a business perspective, with one of our focuses being real estate, we feel this is the city to be in,” he said. “This is a great base to be operating from when you’re thinking from a global perspective.”
He also personally relocated to the city, snapping up a trophy apartment. Public records show he acquired a $50 million six-bedroom co-op at 944 Fifth Avenue from David Hamamoto, the CEO of NorthStar Realty Finance. The broker on the deal, John Burger of Brown Harris Stevens, declined to comment.
After months of deliberation on the fund’s direction, McCourt scooped up the vacant site at 356 10th Avenue in August. No brokers were involved in the transaction.
“We were trying to figure out, do we want to become more of a development company or more of a buy-and-hold real estate company?” Wilhelm explained. “Frank kept coming back to sexy development deals and the idea of building important buildings. There were some trophy assets that we were looking to do on a buy-and-hold basis in big cities, which also piqued his fancy, but these mixed-use developments, which had residential up top and office and retail at the bottom became a recurring theme.”
Indeed, the transaction was sexy, especially since the land was valued so much higher than the $42 million that the Sherwood partnership paid British banking giant Barclays for it in 2011. (Barclays wrested control of the site earlier from developer Gary Barnett.)
But according to Sherwood’s Katz, McCourt paid market rate.
“It wasn’t that the price he paid for it was so high. It was that the price we bought it for was so low,” Katz said. “We bought it when the market was in the doldrums.… Hudson Yards hadn’t started yet and, in that environment, people didn’t know if it would ever happen. So we got a heavy double discount.”
McCourt plans to construct a 730,000-square-foot tower that will include residential condominiums on top and retail on bottom. What’s in between is still undecided; the fund is debating between office and hotel use, McCourt said. Once that’s set, McCourt may solicit submissions from potential architects. A construction start date has not yet been determined.
McCourt and his partners have identified development as their best chance at success.
.....At press time, negotiations were underway for another New York site, said McCourt, who declined to offer any specifics. The team has already passed up on two significant New York deals, said Greenberg Traurig’s Ivanhoe, pointing to their fussiness as a potential sign of future success.
“This market is so crazy that a lot of investors, particularly non-New Yorkers, want to plow ahead in order to invest here no matter what, and so they don’t always do their homework or they hold their nose through the problems to win competitive bids,” he said. “Frank has a much more thoughtful and sober approach. He passed on two hairier deals before he settled on this one, which was probably the right decision.”
While McCourt is keeping mum about his next deal, he’s bullish on New York.
“If you can’t get excited about New York looking out that window, there’s something seriously wrong with you,” he said as he stared out at Central Park.
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