Luxury Developer Extell Took Hard-to-Get PPP Stimulus Loans

Extell and unflappable CEO Gary Barnett in the hot seat again

Extell’s Central Park Tower rises heigh above neighboring buildings, Photo by Shinya Suzuki
(CC BY-ND 2.0) – https://flic.kr/p/2hiRsmC

(NEW YORK, NEW YORK)— After the Small Business Administration released its report on recipients of the Paycheck Protection Program (PPP), numerous stories emerged of the not-so-small businesses who also received the coveted loans. Among them is luxury real estate developer Extell, according to The Wall Street Journal. The company is known in New York City for its glitzy and sometimes controversial luxury developments like the Central Park Tower, which looms above billionaire’s row and drew public ire for the long shadows it casts on Central Park, and Hudson Yards.

The report from WSJ reveals that Extell received somewhere between $2.5 million to $6.5 million in loans in total, a number that grates on all those who know the valuation of the company’s numerous investments across the city. Central Park Tower alone cost $3 billion to build. The SBA’s report shows that while 86% of applicants received less than $150,000, 75% of the total funds were distributed as loans between $150,000 and $10 million. To put it another way, 75% of the total funding available went to 15% of the total applicants. Only around 0.1% of all loan applicants received more than $5 million—Extell among them.

Long before the report was released, the PPP had been dogged by accusations of corruption. The PPP was designed to benefit small businesses, defined as companies with fewer than 500 employees; however, no ceiling was set on the valuation of the company seeking a loan. Controversies arose as early as April, when stories emerged about small business owners denied PPP loans due to lack of funds while simultaneously it was revealed that giants from the pharmaceutical, financial, and hospitality industries had received millions of dollars in lump sums. Ashford Hospitality, which operates the Atlanta Ritz Carlton, received a grand total of $67 million through applications filed by three subsidiary companies. The backlash was so intense that the biggest beneficiaries promised to pay back what they had received.

April’s controversy only applied to publicly traded companies whose finances were already available for scrutiny. The SBA’s latest report, which uncovers loans received by companies like Extell, was only released under intense pressure from newsrooms like ProPublica and other DC watchdogs. Still, the record only names entities who received more than $150,000. Journalists are still trying to pressure the agency to release the other names.

Extell’s CEO, Gary Barnett, is unlikely to be fazed by the controversy. He is hated both by housing activists and envious rivals. Most notoriously, he was one of the few developers willing to die on the “poor door” hill, defending his decision to create a separate entrance for the low- and middle-income residents of luxury buildings (affordable housing often affords developers major tax breaks and favorable consideration for rezoning applications). He has made notoriously few friends among fellow developers over the years, including a few clashes with Donald Trump, but has agents clamoring to sell his ritzy luxury condos. At Central Park Tower, the starting price for a two-bedroom was $7 million; eighteen units were priced above $60 million.

Barnett has also been credited with creating New York’s luxury living glut. Even before the COVID crisis many were speculating on the long-term viability of his investments. As early as 2014 the billionaire clientele he catered to were  often facing reversals of their personal fortunes. A crisis at Extell may have been long brewing

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