An interesting phenomenon seen over the last few years of the real estat eboom is the amount of celebrities who turned property developer. Presumably drawn by the lure of more easy money, as none of them have any particular experience or skills in this area (other than deep pockets). Leonardo di Caprio, John Leslie and Paris Hilton come to mind. The sensible among them merely lend their name to a project for a fee, but some actually put up the cash.
The latest victim of the financial crisis, is Magic Johnson, the retired basketball star. He invested in 110 Green St. Development LLC, the developer of the 130-unit development called The Viridian in Brooklyn’s trendy Greenpoint district. The company filed for Chapter 11 bankruptcy protection while it tries to convert the condos in the unoccupied building into rental apartments instead. This seems a popular approach lately and the New York luxury condominium market is being flooded with high-end rental units.
In court documents filed Feb. 5 in U.S. Bankruptcy Court in the Eastern District of New York, the developer said the “unprecedented decline in the real estate market generally, and Williamsburg/Greenpoint specifically” led it to conclude condos were not the best use of the property.
Canyon-Johnson Urban Fund — a private real estate fund focused on urban properties whose investors include Johnson, who played for the Los Angeles Lakers National Basketball Association team — has provided the development with $12.3 million in mezzanine financing.
New York is finally starting to experience the financial downturn and prices are falling brutally. The average price for a condo in North Brooklyn, which encompasses Greenpoint, a district popular with artists and young professionals, fell nearly 9 percent in the last quarter of 2008 from the previous quarter and in some areas prices are falling even more rapidly.
110 Green St. listed assets between $10 million and $50 million and liabilities in the same range, according to court documents, and has a loan of $35.75 million from the Bank of New York in addition to the Canyon-Johnson Urban Fund loan.
The company said in the filing it has held talks with leasing company Citi-Spaces Real Estate Services about marketing the apartments as rental units, and said Fannie Mae showed “strong interest” in providing replacement financing once Viridian is rented.
