Antares star burns out

joe-beninati-sutton-place-

Joe “Isuzu” Beninati

Joe Bennati , former co-partner of Greenwich’s Antares Partners, threw his failed Sutton Place project into bankruptcy this week.

A planned 900-foot-high condominium tower, a modernist showpiece designed to rival the tallest new Midtown Manhattan residential skyscrapers, landed in bankruptcy court on Thursday amid a slowing luxury market.

Developer Joseph Beninati’s Bauhouse Group put the project into chapter 11 bankruptcy on Wednesday to try to halt a foreclosure after he was unable to find lenders to refinance short-term loans the group used to acquire land and air rights for the tower on East 58th Street near Sutton Place. Construction has not started.

The developer was seeking to block an effort by an investment firm controlled by real-estate investor N. Richard Kalikow from foreclosing on the development. The project faced opposition by local officials and worries by lenders about the increasing risk in financing high-end residential towers.

The bankruptcy of the Sutton Place project, and the slowing demand for condos in super-tall Midtown towers on and around West 57th Street, signals a broader unease among banks and other lenders about financing luxury development. But it also shows how the market can be unsparing for developers without deep pockets or a strong track record in creating these enormously complex buildings, development experts said.

The Midtown area has set new benchmarks for Manhattan real estate, including a $100.5 million sale on West 57th Street, sometimes known as Billionaire’s Row. But during the second half of 2015, this portion of the market began to cool as the number of slender towers on the market rose and economic turbulence in much of the world made wealthy international buyers wary.

During a Thursday hearing in U.S. Bankruptcy Court in Manhattan, lawyers for Mr. Kalikow’s investment vehicle asked Judge Sean Lane to dismiss the bankruptcy, which they have called a “classic bad-faith filing” intended to thwart foreclosure. Court papers show the lender is owed more than $170 million, including interest and fees, a figure that is growing by $2.67 million a month.

This WSJ article I’m quoting from describes Beninati’s collapse as a bellwether of looming disaster, and it may be right: when Joe turns up on the scene, the party’s over, as The New Yorker’s Nick Paumgarten noticed when he visited Greenwich in 2008 and reported on, among other characters, Joe Bennati and his partner Jim Cabrera  in  a piece, “A Greenwich of the Mind” , which was appropriately subtitiled “What happen when the downturn got up market?”

Here’s Paumgarten’s assessment of just one of the Antares Boyz failed projects, the huge pile of rock off Langhorne Lane:

In recent years in Greenwich, as elsewhere, many developers have made a great deal of money buying up empty lots or teardowns and building enormous speculative ready-to-occupy mansions. You see them everywhere, a proliferating clan of insta-mini-giganto luxury houses, modest at ten to fifteen million dollars apiece. Their banal extravagance both mitigates and exacerbates what people either too rich or too poor to live in such houses would consider their tackiness.

Lake Carrington is enormous and speculative but not quite occupant-ready. It was framed out and drywalled but otherwise unfinished: no bathroom or kitchen fixtures, no moldings. The floors are plywood. It is a husk. To move in, a buyer would need to put in an additional five to fifteen million dollars’ worth of work. The developers’ name for this situation was “couture-ready,” the stated theory being that the buyers, whoever they might be, would want to customize the guts, but not the shell, to their taste.

Another way of looking at Lake Carrington was that it was a Potemkin manor, a movie set, not as much a dream house as a house in a dream. The developers, in a booklet promoting the property, which was known around their office as “the Bible,” had described it as “Gatsby-esque,” inadvertently summoning up the pretense and the tragedy, rather than the grandeur, of West Egg. The Bible featured stock photographs of polo players, vintage-car grilles, little girls blowing cattails: a Greenwich of the mind. The house was, in one sense, an entirely superficial confection of Greenwichness, and, in another, a canny apotheosis of it. Lake Carrington went on the market in April, 2007, listed at twenty-eight million dollars.

“Potemkin manor” is an apt description of all that these two individuals achieved, and the NYC broker who’s still suing Bennati for stiffing them on their commission for Sutton Place would undoubtedly say that the sham continued across the border.

39 Comments

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39 responses to “Antares star burns out

  1. Anonymous

    Whoever lent this clown money this time around deserves to lose it for stupidity

    • True – I’ve been astonished over the years to see how much money people and banks will lend to known felons and failures. The banks are probably explained by a bribed loan officer, but who doesn’t check when parting with his own money?

      • AJ

        I would guess more people than you can imagine. Need I say Fairfield Greenwich, seven billion dollars, and due diligence. Mr. Fund of Funds, Mr Due Diligence himself, claims to have no knowledge of what he was investing in.

        BTW, if it hadn’t been for 2008, I think the Antares boys would have pulled it off, but then it’s always something.

  2. Cos Cobber

    Track records always matter in RE development.

  3. Mickster

    Why would the NYC broker be suing Bennati for commission? He was the buyer. He should be suing the seller, no?

    • I’ve received several long emails from the disgruntled fellow, and he’s followed up with articles on his lawsuit, as well as the developing disaster at Sutton Place. I really don’t remember the details – perhaps he lined up financing under an agreement for a commission? – but so far as I could see, the dissatisfaction is real, as is the cause of action (or it would have been dismissed).

  4. Southern Belle

    All I can say right now is “Joe – it’s time to lose the lax bro hairdo.”

  5. Anonymous

    “But it also shows how the market can be unsparing for developers without deep pockets or a strong track record in creating these enormously complex buildings, development experts said.”

    Truer words not spoken. An acquaintance of mine has been in the resi construction/development/investor/lender (direct or syndication) gig for almost 20 years, and is now just graduating into doing properties in the low-mid 8 figures. That’s still a s$%! ton of money. The amount of time, money (including cash), headache, and expense has to be staggering to get any sort of project done in the tri-boroughs.

    A failed Greenwich developer trying to get a tower done in NYC? Yeah, that should have been a flag to any lender or investor as a non-starter from the get-go.

  6. uminn65

    i just couldn’t ignore this one sentence from the New Yorker quote: ” Their banal extravagance both mitigates and exacerbates what people either too rich or too poor to live in such houses would consider their tackiness.” no further analysis of the New Yorker’s loss of subscribers is needed. Even when they’re right, they’re insufferable.

    • Walt

      Thank you for sharing this article. Even though it made me cry like a little bitch.
      Steph has daddy issues? Who would have thunk? But it makes her all the more such a tasty little morsel and pop tart!! Girls with daddy issues are the BESTEST!!
      So having daddy issues is fine. In fact, it makes her even more edible. But solving them with Buddy Hackett as the daddy? That is just wrong. I DON’T GET IT!!
      But I can plow her through these issues. Bang some sense into her. Treat her like the dirty little bad girl she wants to be. Do unspeakable things with her. She can ride my face like a one trick pony!!
      Don’t give up Steph!! I am only a phone call away. We can order gook takeout. My treat!! I could care less that the kids are poofters. All I care about is your happiness. And you using my head as earmuffs.
      You have no downside.

  7. Anonymous

    That New Yorker article is so completely accurate in its quiet, calm evisceration of Leased Cayenne Greenwich. I read it when it came out, and could do so again and again.

    • Anonymous

      Not sure what the excellent New Yorker article has to do with your leased Cayenne meme. Keep trying with that though. Most very wealthy people lease their high end cars, as well as those that can’t really afford them.

      • Thurston

        Ambition without intelligence is like a yacht without sails. Cayenne is the guinea spice. What on earth does that have to do with tall buildings?

      • Mickster

        True. 30% of all cars sold now are leased and this at the current rate it will be 50% by 2025. I would except I drive 20k on average.

        • Anonymous

          auto securitization is the gas that fuels that flame.

          when it implodes, and it will, so goes a lot of leasing. and manufacturer financing for that matter. or at least both will be highly curtailed.

          the paper that’s getting written now is an implosion waiting to happen.

    • Although, as he termed it, “I was left on the cutting room floor”, I spent quite a bit of time with the writer showing him around town, and found Nick to be a kindred spirit.

  8. A frank lender

    It is amazing that Mr. Bennati was able to start another fund. Antares collapsed in 2008 not because of the market crash, but because virtually all of their deals were premised on grossly unrealistic assumptions. The 2008 crash, however, gave sub-par investment managers a convenient excuse for their failures.
    Another commercial RE crash is soon approaching because once again excess capital is causing funds to chase deals, including lending funds using dumb valuations. Thankfully It won’t have the scope of the 2008 crash because the level of leverage is nowhere near as insane.
    The lesson for investors from 2008 is to not let the Fund managers that made the bad decisions remain in place and keep banging them for fees. Mr. Kalikow is smartly moving fast.

    • The Beninati deals, as you say, were founded (and funded) on bullshit and warm gas. The apartments to condo deal in the western end of town -Putnam something- was funded on the basis of a $200 million valuation, twice what 3 other would be buyers came up with. A numbers dork at Lehman popped his head out of the closet where they’d stashed him, two days before closing and said “guys, I keep doing the numbers, and no way does this work”. ” Shut up”, his boss explained, “we’re picking up $15 million on this”. Lehman got its fee, Beninati got his money, and the Georgia State Employee Pension Fund got the shaft.
      Any due diligence in 2013, when Sutton Place was getting off the ground, would have turned up an incredible record of ineptness and malfeasance from just 8 years before, so it seems no such due diligence was performed.
      As you say, we’re back where we were.

      • Anonymous

        I know the people that owned the Putnam Green/Weavers Hill properties that sold to Antares. There was a great deal of surprise when it sold. I asked one of them about it and his response was “Someone came to us and threw stupid money at us for the properties and we would be stupid not to sell for that crazy amount”.

        • Cos Cobber

          I knew others who looked at Putnam Green/Weavers and I knew the broker. The entire deal was a stunner with virtually everyone but the buyer keenly aware the numbers didn’t pencil…unless you believe everyone in the economy was going to be employed and e-z money hedge funds…which was the backbone of the Antares philosophy.

        • The talk among the trade was that all anyone at Shearson had to do for any sort of due diligence was to call ANY real estate agent of town and they’d have discovered that their clients were paying twice what the property was worth. The fact that they didn’t is all the evidence many of us needed to know that there were kickbacks and shenanigans going on.

      • A frank lender

        Chris, you’re 100% correct re. the disastrous Lehman Putnam deal.
        My small fund was foreclosing on deal in Texas, and the sponsors filed. Lehman almost took us out at a loan twice ours, which was insane. That these senior Lehman people who were way smarter than me, were even looking at that valuation level in late 2007 when values were softening, in hindsight was another harbinger of why they later collapsed. No skin, no care.
        The problem is the guys that manage the Georgia Pensions of the world don’t hold the Fund guys accountable because they want to maybe work for those funds. They jump over all the time. It’s essentially the same with both sides of the aisles in Congress.

  9. Anonymous

    Next will be a 2000 ft. tower in Dubai. You can bet someone will finance.

  10. Anonymous

    Did anyone watch 60 minutes ? Loser Obama is going to Saudi Arabia to get back to his Muslim roots!

    • Anonymous

      yeah i remember that place. there were (maybe still are) 2-3 houses that were formerly big & very nice, that fell into disrepair/hard times for the owner.

      sad to see on an otherwise nice street. that loop, and area, is quiet, walkable, and king merritt is a small terrific community. close to the merritt if you drive or train early into nyc. port chester station is a short hop also.

    • you’d think GT would get the spelling correct (tho’ Hettiefried does a have a certain cache as opposed to Hettiefred).

    • Cos Cobber

      Unfortunately in CT booing Malloy is probably for the wrong reasons….they boo because of the layoffs and not because of the budget/pension mess.

  11. Anonymous

    Well said “Joe – it’s time to lose the lax bro hair”