NYC Real Estate Nightmare for Irish

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NYC Real Estate Nightmare for Irish

March 12, 2008

By Debbie McGoldrick

A DREAM chance of owning a brand new condominium in the heart of Manhattan has turned into a nightmare for dozens of Irish-based investors who signed contracts to purchase apartments in a new development on the East Side two years ago, only to be recently informed that the entire building was sold to New York University.

J.D. Carlisle, one of the biggest real estate developers in New York, specifically targeted Irish residents as potential purchasers for its Gramercy Green condominium located in Gramercy Park at the corner of East 23rd Street and Third Avenue.

The 21-story luxury building, with 292 apartments, was to feature a combination of spacious studio, one and two bedroom homes, all with top of the line finishes. The building also boasted a 24-hour doorman and concierge service, a resident’s fitness center and a spacious rooftop terrace.

But now, the Irish investors who signed contracts to buy an apartment sight unseen have been left bitterly disappointed with the news that J.D. Carlisle sold Gramercy Green in its entirety to New York University, which plans on using the building for dorm rooms.

“I’m still stunned over what’s happened because it is so grossly unfair,” one Irish purchaser, a businessman with extensive interests in the U.S. who wishes to remain anonymous, told the Irish Voice.

“We signed our contracts and handed over our money in complete good faith, and this is what happens. I know that real estate dealings can be tough, but this just isn’t right.”

The developers, working with well-known Irish agent KMS, marketed the property extensively in Ireland through media advertising and an open house at the Berkeley Court hotel in Dublin in February of 2006. That event attracted many potential Irish investors who were particularly buoyed by the strength of the euro against the dollar, and frustrated by skyrocketing real estate costs in Ireland.

According to a February 9, 2006 report in The Irish Times, “Half the units (are) reserved for Irish buyers in advance of a local launch. The remaining apartments go on sale to New Yorkers in six months time.

“KMS will provide investors with a full service package throughout the process which includes legal representation in Ireland and the US; finance packages in dollar and euro currency; construction monitoring and a letting and management service post-construction.”

According to the businessman who spoke with the Irish Voice, the showcase at the Berkeley Court was top-notch. KMS, which according to reports has successfully worked with J.D. Carlisle on a number of other New York developments, provided glossy brochures detailing Gramercy Green’s many attractions. Floor plans of the apartment configurations were also available.

Prices were pitched at $405,000 for a studio, all the way to $1.4 million for the two bedroom models. The deal, according to the businessman, was too good to pass up. He – and dozens of others, he adds – signed initial confirmations on the spot, and handed over checks for *5,000.

“I was delighted,” he says. “You could buy the same amount of space in Dublin, but instead of costing dollars it would be in euros. It was way better value to buy in New York, especially for me as I travel back and forth so much.”

Not long after, those who gave their initial deposit at the open house were presented with formal contracts of sale. The businessman promptly signed the paperwork and included the required $100,000 second deposit for his one-bedroom home.

And then he began to wait . . . and wait. The building was scheduled for occupancy in 2008, but the businessman’s several calls to check on progress during the year went unreturned, until he finally spoke to an agent at KMS late last year who assured that the development was scheduled for completion on time.

During a Christmas/New Year visit to New York the businessman visited Gramercy Green to personally check on the progress. A foreman on the site told him that the building was wholly owned by New York University.

“It was a kick in the teeth,” he said. “Perhaps something like this could happen in another city, but New York? With such a reputable developer?”

Though it is not clear when exactly J.D. Carlisle sold the entire building to New York University, an announcement was made about the acquisition earlier this year by the New York real estate blog, curbed.com, reported the news last month.

The businessman – and, presumably, other Irish investors — was contacted by KMS about the change of plan and offered a full refund, plus an amount of interest that is still being determined. However, he believes that the interest will not account for the financial appreciation that the apartment would have realized since the start of 2006. Though most parts of the U.S. have been affected by a downturn in the housing market, New York City real estate values continue to rise.

“If I had known about this I could have bought something someplace else,” the businessman adds. “To buy a comparable apartment now will cost much more money.”

Breaking contracts is nothing new in the dog-eat-dog world of Manhattan real estate, but given that the project involved a highly reputable developer and was promoted so extensively in Ireland, the businessman expected better. He is also considering further legal options.

Skadden, Arps, Slate, Meagher and Flom, the Manhattan law firm representing J.D. Carlisle, did not return a call from the Irish Voice seeking comment on Gramercy Green’s Irish investors.

James O’Malley, a New York-based attorney, has been contacted by “several” Irish who signed contracts to buy apartments, and are dissatisfied with how the situation has turned out.

“I have been approached about legal redress,” O’Malley told the Irish Voice. “It’s something that we’ll be looking into.”

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