The Dark Side of Real Estate – Kazakh Funds Back NYC Skyscrapers While Their Country is Under Fire

 

By: Benyamin Davidsons

Two posh condo towers are being built in New York City’s Upper West Side, thanks to what critics are calling questionable Kazakh funds.

Plans for an elegant 70-story condominium tower located between Lincoln Center and Central Park have been filed. , As reported by the NY Post, the site at 50 W. 66th St. will be constructed into a 755-foot skyscraper with 127 glitzy residences, boasting a pool, squash courts and an outdoor terrace garden, as per the offering plan filed by Extell Development.  Also, in the Diamond District, at 570 Fifth Ave., the developer has filed permits to construct a 1,100-foot tower with 468 luxury condo units, to add on to his International Gem Tower.

Extell Development is a real estate that is firm involved in residential, commercial and hospitality properties, including several high-profile buildings in New York. The founder and president of Extell is Gary Barnett, who has made a name for himself in the world of New York City real estate.

One of the projects that Extell and Barnett were involved with was the parking space site of the New York Times building. Extell owned the space and in 2001, another real estate titan, Bruce Ratner was seeking to it for the office tower. Wikipedia reported that following lengthy litigation, Barnett was forced to sell the space to New York state via eminent domain.

In 2005, Barnett and Ratner were in litigation once again when they wrangled over the ownership of Atlantic Yards in Brooklyn, as was reported by Wikipedia. It was then that Barnett offered $100 million more than Rattner and promised to build fewer buildings and not build what would become Barclays Center. Ratner eventually prevailed.

The Post reported that other super tall towers that Extell has been involved with include One57 (where a penthouse sold for more than $100 million) and Central Park Tower (where a unit is on the market for $65 million).

The Post reported, both of the illustrious projects were backed by a shadowy private equity firm known as Meridian Capital.  Meridian was founded in 2002 by Kazakhstan’s former oil and gas minister Sauat Mynbayev, along with Kazakh billionaire Askar Alshinbayev and top executives of Kazakhstan’s largest private bank.  Meridian, incorporated in Bermuda, owned a $127 million stake in 50 W. 66th St. ad well as a $263.7 million ownership of 570 Fifth Ave.  The positions have since been bought out by Extell.

While all this money is backing towers in the Big Apple, Kazakhstan has been all over the new with employees on strike complaining they don’t even have money for groceries. Kazakhstan has been battling unrest, anti-corruption revolts and fires set to government buildings, sparked by exorbitant gas prices.  President Kassym-Jomart Tokayev warned protesters that security forces are free to “fire without warning”.

“We’ve known [Meridian Capital] for 15 to 20 years,” said a person close to Extell who spoke to the Post, under the condition of anonymity. “They’re just good businessmen who made good investments. What’s wrong with that?”  The source pointed to other large Meridian deals like a shopping mall in Saint Petersburg it sold for $1.1 billion to Morgan Stanley. “Meridian couldn’t do deals like that if it was dirty,” the source added. “Real estate is one of the cleanest industries in the world. If you want to launder money, get diamonds or art that you can transport. You can’t carry a building on your back.”

Others beg to differ.  NYC real estate assets have been “a favorite placement vehicle for kleptocrats, corrupt officials and criminals,” said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University. “Until very recently, the US government had almost no legal actions it could take against money laundering in real estate.”

Meridian did not respond to a request for comment.