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The Anti-Trump

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Gary Barnett, the builder of this era’s glitziest buildings, does not have cotton-candy hair or a big mouth—but what he does have is hubris.

I’m not Greta Garbo,” says Gary Barnett of Extell com­pa­ny, a devel­op­er of lux­u­ry Manhattan build­ings and just about the only builder of con­se­quence who hasn’t been stopped by the crash. While Barnett is an increas­ing­ly vis­i­ble pres­ence on the Manhattan sky­line, most of his life is else­where. An Orthodox Jew and father of ten chil­dren, he lives in Queens and guards his pri­va­cy obses­sive­ly. In a recent Crain’s arti­cle, he refused to divulge his age (he is 54). “It’s not like I’m fright­ened of the cam­era,” he con­tin­ues. “I’m not Howard Hughes. It’s not that I hate pub­lic­i­ty because I hate pub­lic­i­ty. It’s that I don’t see any good use of it. Donald Trump sells build­ings that way, or he gets a tele­vi­sion show and makes mon­ey off it. But that doesn’t do any­thing for me.”

Barnett is the anti-Trump. His build­ings are as osten­ta­tious as he is unas­sum­ing. Extell, which Barnett found­ed in the ear­ly nineties after a career as a dia­mond trad­er in Belgium, is emblem­at­ic of a new type of New York real-estate firm that spe­cial­izes in devel­op­ing ultra­lux­u­ry build­ings that are akin to gat­ed com­mu­ni­ties in the sky, where buy­ers with mil­lions to spend can sat­is­fy near­ly any desire with­out ever step­ping out­side. His con­dos, like the 60-sto­ry Orion on West 42nd Street or the Ariel tow­ers on Broadway at 99th Street, include such extrav­a­gances as indoor lap pools, spas, screen­ing rooms, and pet salons. Barnett’s par­tic­u­lar vision for urban liv­ing now appears wild­ly out of touch with cur­rent eco­nom­ic realities—and yet he con­tin­ues to sell prop­er­ties to buy­ers who, so far at least, have been insu­lat­ed from the rav­ages of the reces­sion. “He has a real­ly strong stom­ach,” Corcoran CEO Pamela Liebman says. “He shows no fear.”

Barnett’s lone-wolf style has not exact­ly endeared him to his peers. New York real estate has long attract­ed play­ers who view busi­ness as both a com­mer­cial and a civic pur­suit. Jerry Speyer, the co-CEO of Tishman Speyer, is per­haps the most famous arche­type of the New York mach­er, serv­ing as a con­fi­dant to may­ors and gov­er­nors. Inside the fish­bowl of New York real estate, Barnett has few friends. He’s a sub­ject of fas­ci­na­tion and deri­sion, a com­bat­ive fig­ure who is unafraid to chal­lenge the indus­try order. Since blast­ing onto the scene at the start of the last decade, he has clashed with Bruce Ratner and the New York Times for con­trol of the land under the Times’ new Eighth Avenue head­quar­ters and made a sur­prise eleventh-hour bid for Atlantic Yards just as Ratner thought the mas­sive devel­op­ment project was in his grasp. And now that the boom is over, Barnett is even more out of step with his peers. While few oth­er devel­op­ers are build­ing, Barnett is charg­ing ahead with projects that are grander than any­thing con­ceived at the market’s ver­tig­i­nous peak. In March of this year, he snapped up the Helmsley Carlton House at 680 Madison Avenue for $170 mil­lion, vast­ly out­bid­ding oth­er suit­ors. And, in an act of either extreme con­fi­dence or epic fol­ly (or both), Extell recent­ly start­ed con­struc­tion on a project called Carnegie 57, a 1,000-foot-tall, $1.3 bil­lion con­do and hotel designed by Christian de Portzamparc and backed by the invest­ment arm of the Abu Dhabi roy­al fam­i­ly. When com­plet­ed in 2013, Carnegie 57 will top Trump’s U.N. Plaza tow­er for brag­ging rights as the city’s tallest res­i­den­tial build­ing. “There’s a resent­ment that he’s able to still build and doesn’t give the appear­ance that he’s affect­ed by this mar­ket,” says Stuart Saft, a part­ner at Dewey & LeBoeuf.

The resent­ment is tem­pered by the fact that many of his peers expect him to fail. “You have to bet that the peak will be high­er than it’s ever been,” one incred­u­lous real-estate banker said. “It’s a huge bet.”

I don’t see there being sig­nif­i­cant com­pe­ti­tion for what we’re doing,” Barnett tells me. Barnett is stand­ing at a con­fer­ence table in his cor­ner office, flip­ping through a glossy prospec­tus with ren­der­ings of the Carnegie 57 tower—a real-estate fairy tale in blue glass, punch­ing out of a scrum of mid­town sky­scrap­ers. “I hate to speak in hyper­bole, but I think it’s going to be the nicest project done in the city, because the archi­tec­ture is beau­ti­ful,” Barnett says, sound­ing, it must be said, more like Trump than usu­al.

Barnett claims that irra­tional exu­ber­ance is not involved in his build­ing spree. “There’s no new inven­to­ry com­ing to mar­ket,” he says. “If you go around, there’s a lot of pieces of dirt that didn’t get built. When this thing crashed, there wasn’t tons of over­hang of inven­to­ry. If the bub­ble had con­tin­ued for anoth­er two or three years, it might have been real­ly bad.”

Early in our con­ver­sa­tion, Barnett’s cell phone rings. He pulls out what looks like a flip phone cir­ca 1997. He’s not wield­ing a BlackBerry— stan­dard-issue for a busi­ness­man of his station—nor, I notice, are there any com­put­ers or elec­tron­ic devices in his office, apart from the Bose Wave radio sit­ting on a shelf behind his desk. “I’m a dinosaur,” Barnett says when I ask him why he doesn’t use a com­put­er. “My sec­re­tary gives me my e‑mails. I have finan­cial peo­ple who do spread­sheets. I under­stand the con­cepts of how all these things work, I just don’t know how to use them. I’m get­ting along fine just like this.” Barnett says he doesn’t trust tech­nol­o­gy. “I think the e‑mail is very dan­ger­ous. I see peo­ple write things they’d nev­er dream of say­ing.”

What Barnett lacks in tech­no­log­i­cal lit­er­a­cy he com­pen­sates for with raw intel­li­gence. “He does the num­bers in his head,” says Sue Ault, who’s worked with Barnett. “That’s what’s scary. You go in and show him this big spread­sheet, he’ll look at it and instant­ly pick out some­thing that’s wrong with it.” 

Barnett start­ed his jour­ney in an alto­geth­er dif­fer­ent part of Manhattan from where he’s mak­ing his mark now. Born Gershon Swiatycki, he was raised in the clois­tered Orthodox Jewish com­mu­ni­ty on the Lower East Side. His father, Chaim Swiatycki, a respect­ed rab­bi and Talmudic schol­ar, lat­er moved the fam­i­ly of ten chil­dren out of the city to the strict­ly obser­vant Rockland County com­mu­ni­ty of Monsey. Later, at Queens College, Barnett stud­ied math and lat­er got an eco­nom­ics degree at Hunter.

During a vaca­tion in Florida, he met and fell in love with Evelyn Muller, an heiress to a promi­nent Jewish dia­mond-trad­ing fam­i­ly from Antwerp, Belgium. Barnett and Muller mar­ried, and her father, Shulim, invit­ed him into the fam­i­ly busi­ness. For the next ten years, Barnett lived in Belgium, trad­ing dia­monds while rais­ing five chil­dren with Muller. “He devel­oped the American mar­ket for us,” Evelyn’s broth­er Jean Claude Muller told me. “He saw America at the time was a big mar­ket.”

In the ear­ly nineties, the Mullers and oth­er Belgian dia­mond deal­ers were look­ing to diver­si­fy into real estate, and Barnett offered to explore oppor­tu­ni­ties back in the States. His first deals were mod­est. He bought shop­ping malls and office build­ings through­out the Midwest.

In 1994, Barnett made his first major New York pur­chase when he bought the Belnord, the H. Hobart Weekes– designed Upper West Side apart­ment tow­er on 86th Street. “This was like a 100-carat dia­mond in the rough,” he remem­bers telling his Belgian investors. “Somewhere in there is a real­ly beau­ti­ful dia­mond.” He paid a scant $18 mil­lion. Few oth­er New York devel­op­ers were will­ing to touch the rent- con­trolled build­ing, fear­ing nasty lit­i­ga­tion with long­time inhab­i­tants, which was already under way, but Barnett was unde­terred by the legal fight, a fear­less­ness of which he’s made a habit.

Just as Barnett’s New York busi­ness was get­ting off the ground, his wife was diag­nosed with can­cer. She died two and a half years lat­er, at 37. Alone with five chil­dren, Barnett was dev­as­tat­ed. “That was a very, very sad time for him,” says Ault. “You nev­er total­ly recov­er, you just move on. That’s what he did. He had no choice. He had the five chil­dren to par­ent. I saw a change, in that he was a much sad­der per­son. Not depressed, but a sad per­son, for many years.” 

It was a dark time, but Barnett’s real-estate busi­ness was tak­ing off. He remained close to the Mullers, who con­tin­ued to invest in his projects. In 1998, he built what would become the W Times Square. It was a flag­ship project that helped con­vince Barnett he could play on the biggest stage. As an out­sider, he oper­at­ed with­out inhi­bi­tion where oth­ers might have pro­ceed­ed more cau­tious­ly. “We didn’t start small,” he says. In 2001, Bruce Ratner and the New York Times were maneu­ver­ing to buy a plot of land on Eighth Avenue and 41st Street to devel­op the Times’ Renzo Piano–designed head­quar­ters. Barnett, who owned a park­ing lot on the site, tried to orga­nize sur­round­ing landown­ers. “I said, ‘Let’s all join togeth­er and we’ll be in con­trol of the site, and if the New York Times real­ly wants it, they’ll pay us more,’ ” he told me.

The effort failed, and when the state seized his prop­er­ty in an emi­nent-domain rul­ing, he sued. “The lit­i­ga­tion can go for a life­time, as far as he’s con­cerned,” says Ault. “He will tell lawyers, ‘I got more mon­ey, I got more time, and I got more lawyers.’ ”

The judge in the case ruled against him, a deci­sion that still ran­kles. “I don’t think that whole process was fair at all,” Barnett told me. “The mar­ket turns great and [the state] turns around and hands it over to anoth­er devel­op­er and the New York Timesto make mon­ey on?”

By this time, the city was shak­ing off the post‑9/11 reces­sion, and Barnett was look­ing for deals all over the city. In 2003, he part­nered with the Carlyle Group and built the $305 mil­lion Orion, a 60- sto­ry lux­u­ry tow­er on a far-west stretch of 42nd Street that became the city’s sixth-tallest res­i­den­tial build­ing.

In March 2005, as he was fin­ish­ing con­struc­tion on the Orion, Barnett chased the biggest deal of his career. A pair of Hong Kong investors had qui­et­ly put Riverside South—a 77-acre tract stretch­ing from 59th Street to 72nd Street—on the block. The mas­sive devel­op­ment site had first been optioned by Trump in 1974, and had lan­guished. But fol­low­ing the real-estate crash of the ear­ly nineties, Trump sold a major­i­ty stake to a group led by investors Henry Cheng and Vincent Lo, in 1994, for $100 mil­lion. (Trump retained a 30 per­cent minor­i­ty inter­est.) With the mar­ket blast­ing, the prospect of buy­ing such a giant swath of unde­vel­oped land drew inter­est from the city’s A‑list real-estate play­ers. Related, Durst, and Vornado Realty Trust all lined up to bid on Riverside South. Barnett was by far the least known of the bunch. But while the oth­ers hes­i­tat­ed, he pounced.

The sale was being run by real-estate exec­u­tive Barry Gross, who rep­re­sent­ed the Hong Kong part­ners in the deal. “Gary was ready to buy the plane tick­et and go” to Hong Kong, Gross told me. “The oth­er bid­ders act­ed in a cagey man­ner through­out the nego­ti­a­tions.”

What, you think [the Chinese are] giv­ing up a bil­lion dol­lars in order to cheat Donald out of $17 mil­lion? The whole thing’s a joke.”

It was a chaot­ic time in Barnett’s life. His sec­ond wife, Ayala, had giv­en birth to their sec­ond child. Barnett called Gross a day before the flight to say he might have to can­cel his trip. But the next day, a few hours before they need­ed to leave for the air­port, he called to say it was on.

On the Cathay Pacific flight to Hong Kong, Barnett met Gross and his lawyer and start­ed nego­ti­at­ing dif­fer­ent ways to do the deal, run­ning num­bers in his head. Landing in Hong Kong, Barnett show­ered and met Cheng at his office, where they nego­ti­at­ed all day, after which Gross and Barnett repaired to a kosher din­ner at Hong Kong’s Jewish Community Centre.

Back in New York, Barnett sub­mit­ted his for­mal bid. He called Gross and said he had finan­cial back­ing from the ven­er­a­ble Carlyle Group. He faxed a let­ter on Carlyle let­ter­head stat­ing that they were pre­pared to bid $1.76 bil­lion, at that time a record price for a New York trans­ac­tion. To make the deal work, Barnett planned to sell three of the con­do tow­ers on the site to Sam Zell’s Equity Residential for $800 mil­lion. Cheng and Lo accept­ed the offer.

On the morn­ing the deal was announced, in June 2005, Donald Trump was in his office over­look­ing Fifth Avenue when one of Cheng’s rep­re­sen­ta­tives walked in and informed him that they had sold to Barnett. Trump went bal­lis­tic. “What devel­op­ment? Our devel­op­ment?” he snapped. He believed the Chinese had got­ten far too lit­tle for such a prized Manhattan devel­op­ment site. “I’ve always felt it was under val­ued,” Trump told me recent­ly.

Trump began furi­ous­ly lob­by­ing Gross to undo the deal, telling him that Richard LeFrak and Colony Capital were each will­ing to pay twice what Barnett paid. “He said you can get out of it,” Gross recalled. “He said I’ll get you a bil­lion dol­lars more.” Gross told me that Colony did offer to pay near­ly $3 bil­lion, but that its bid was only a one-sen­tence faxed let­ter and wasn’t viewed as a seri­ous offer.

The Chinese ignored Trump’s demands. A month lat­er, Trump sued them in Federal District Court in Manhattan, alleg­ing that the Hong Kong investors had breached their duty to sell for the high­est price. The suit also con­tained explo­sive alle­ga­tions that the Chinese had sold the prop­er­ty to Barnett on the cheap and received kick­backs of $19.8 mil­lion as part of a tax-avoid­ance scheme. 

Barnett laughed when I asked about Trump’s law­suit. “It’s like so stu­pid, to be blunt,” he said. “It makes zero sense, and the judge basi­cal­ly agreed.”

Trump was furi­ous with the court’s deci­sion to dis­miss nine­teen of the twen­ty charges. “Colony would have paid more mon­ey!” Trump fumed. “I had an incom­pe­tent judge. This whole thing should be inves­ti­gat­ed. I don’t give a shit. This guy is a total gross incom­pe­tent, he’s an arro­gant fool.”

While Trump lost the case, the alle­ga­tions appar­ent­ly caught the atten­tion of Robert Morgenthau’s office. In September 2009, Morgenthau charged Gross with tax fraud, alleg­ing he fun­neled a $1 mil­lion bonus from the deal into a shell com­pa­ny to avoid pay­ing tax­es. Last December, Gross plead­ed guilty to a mis­de­meanor, agree­ing to pay fines of $135,000. “It came down to me at the end, I was the guy stand­ing,” Gross told me, speak­ing about the mat­ter for the first time. “I was the open tar­get, so you shoot at him.”

Barnett was nev­er impli­cat­ed in any wrong­do­ing and throws up his hands at what he sees as sour grapes on Trump’s part. “It’s ludi­crous,” he says “[The Chinese] owned it! They’re get­ting all the mon­ey. What, you think [the Chinese are] giv­ing up a bil­lion dol­lars in order to cheat Donald out of $17 mil­lion? The whole thing’s a joke.”

In June 2005, short­ly after he signed the record deal for Riverside South, Barnett sum­moned John Cetra, a Harvard-trained archi­tect who was fin­ish­ing work on the Orion, to his office. Barnett told Cetra he was think­ing of mak­ing a bid for Atlantic Yards. Cetra was shocked by the idea. At the time, the Metropolitan Transportation Authority was in the process of nego­ti­at­ing with Bruce Ratner over the rights to trans­form the area over the Brooklyn rail yards into a Frank Gehry– designed future scape. Ratner’s team of engi­neers had done years of plan­ning and invest­ed mil­lions in the project. Bloomberg, and much of the city’s polit­i­cal Establishment, was behind Ratner’s bid, as well as his plans to bring the Nets to Brooklyn. Barnett was undaunt­ed by the long-shot odds. “Gary said, ‘I want to go after this,’ ” Cetra recalled. “We worked around the clock on it.”

Barnett’s improb­a­ble bid stunned the real-estate world. He offered to pay the MTA $100 mil­lion more than Ratner, and in a nod to com­mu­ni­ty oppo­si­tion, his pro­pos­al called for just 4,800 occu­pants com­pared with Ratner’s plan to house 18,000. Barnett left the con­tro­ver­sial Nets are­na out of his bid and agreed not to con­demn any blocks, two prin­ci­pal demands by com­mu­ni­ty activists. Owing to their pri­or bat­tle over the New York Times head­quar­ters, the real-estate press jumped on the feud, por­tray­ing Barnett and Ratner as bit­ter rivals once again at war over prized devel­op­ment rights. Advisers in the Ratner camp cer­tain­ly viewed it that way. “It was an effort to throw a wrench into the process, giv­en what hap­pened ear­li­er,” one per­son close to the process told me. Barnett down­played the whole mat­ter when I brought it up. He told me he’s nev­er met Ratner and insist­ed his bid was strict­ly about busi­ness. 

In the months after Leh man Brothers filed for bank­rupt­cy in September 2008, Barnett, like many of his peers, faced his own cri­sis. He was sit­ting on mil­lions of square feet on which he was pay­ing inter­est. In December 2008, three months after the finan­cial cri­sis explod­ed, he laid off about 15 per­cent of his com­pa­ny. “It was a dark time,” he told me.

As the cri­sis eased, Barnett emerged stronger than his rivals. He invest­ed more equi­ty in his deals and avoid­ed the crush­ing debt that hurt many less-for­tu­nate investors. With his estab­lished net­work of European investors and a sol­id rela­tion­ship with Carlyle and Abu Dhabi oil mon­ey, Barnett’s access to cap­i­tal has remained secure even as oth­er play­ers have seen their sources of fund­ing cut.

Still, Barnett has hit a rough patch in recent months. A few days before we spoke, he had turned over a deed on a par­cel on Tenth Avenue at 30th Street, where he had envi­sioned build­ing a hotel. “It was a tough deci­sion,” he said. “I wasn’t hap­py about it at all. That project wasn’t viable in today’s mar­ket.”

Several of his recent projects have hit sales snags. At the Rushmore, a lux­u­ry con­do on the Upper West Side, he’s embroiled in a bit­ter legal dis­pute with a group of 41 buy­ers. Some bro­kers who deal with Extell bris­tle at Barnett’s hard-knuck­le tac­tics. “He’s tough as nails,” says Upper East Side bro­ker Larry Kaiser. “The bro­ker­age com­mu­ni­ty, whether you like it or not, can make you or break you. His rela­tion­ship with the bro­ker­age is con­tro­ver­sial.”

In the dia­mond dis­trict, Barnett is ensnared in a turf war with the own­ers of 580 Fifth Avenue over his plans to build a Skidmore, Owings & Merrill–designed office tow­er. Barnett has stum­bled with the project. Though it was con­ceived as a 750,000-square-foot tow­er for dia­mond and gem com­pa­nies, Barnett has so far not man­aged to get enough ten­ants to get a con­struc­tion loan. Kenneth Kahn, a part own­er of 580 Fifth Avenue, on the cor­ner of 47th Street, has blast­ed the city and state for extend­ing finan­cial incen­tives to Barnett, essen­tial­ly argu­ing that they’re sub­si­diz­ing his invest­ment at the district’s expense. “He was try­ing to get the city to almost pay for it,” Kahn says. Tensions between Kahn and Barnett were ratch­eted up after Barnett poached Kahn’s ten­ants. “He’s mak­ing them real-estate deals they can’t refuse!” Barnett, not sur­pris­ing­ly, believes it’s all fair play. A few months ago, he even approached Kahn about buy­ing 580 Fifth Avenue and con­vert­ing it into a hotel and con­do, but Kahn turned down the offer.

Barnett says he’s just try­ing to get the tow­er built and get out with­out too much dam­age to his finances. “God will­ing, we’re going to res­cue our mon­ey.”

Given his mete­oric rise, many in the real-estate world won­der if Barnett is cre­at­ing a glob­al firm like Tishman Speyer or Related. That seems unlike­ly, because Barnett insists on con­trol­ling every aspect of the devel­op­ment, from the financ­ing to the choice of mar­ble counter space, so the com­pa­ny will always be essen­tial­ly his oper­a­tion. He chuck­led when I asked if he sees him­self as part of the Establishment. “I don’t think of myself as a mach­er,” he said. 

But mach­ers are def­i­nite­ly pay­ing atten­tion. “A lot of guys, I call them the Rendering Boys,” says Trump. “They come in with ren­der­ings. They’re always show­ing ren­der­ings but nev­er get them built. He gets them built.”

By Gabriel Sherman

The Anti-Trump

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