British developers Nick and Christian Candy are famous for their über-luxury condo One Hyde Park in London, the priciest residential project in the world. But when it comes to Manhattan real estate, the brothers searched for years for a sweet spot.
Now it looks like they may finally have found it. With the August purchase of an Upper East Side townhouse, the brothers are taking on their first New York City redevelopment project — albeit a small one.
The Candys first made headlines in New York last March, when Christian bought the final sponsor unit at the Plaza, a $25.9 million penthouse. (The unit, which the Candy’s interior design firm reportedly renovated, is now listed with Brown Harris Stevens’ Kyle Blackmon for an eye-popping $59 million.) And the brothers — 40-year-old Nick, the alleged “party boy,” and former derivatives trader Christian, 39, the numbers guy — have made no secret of their hunt for more U.S. real estate, since the British government last year announced increased taxes on high-end home sales.
Indeed, in an interview with Bloomberg News last year, Nick said New York could “overtake” London on the real estate front if its leaders continue to make “disgraceful decisions” on taxes.
Then, this summer, Christian bought 19 East 70th Street, an Italian Renaissance-style mansion between Fifth and Madison avenues, for $35 million. The Candys declined to be interviewed for this article, but a representative for their design firm, Candy & Candy, confirmed that they will convert the 17,000-square-foot house to residential use. The eight-bedroom home was last used as an art gallery, and the Candys will reportedly turn it into a single-family mansion. The spokesperson also told TRD that they do not plan to live in the home, suggesting that they are likely to sell it once renovations are complete.
Broker Adam Modlin, who’d listed the property for $38 million, did not respond to requests for comment.
Possibilities for the 30-foot-wide home are numerous, said Jed Garfield, managing partner with brokerage Leslie J. Garfield, which sold the home next door. He noted that the townhouse has a massive basement that could accommodate a pool.
When the project is complete, Garfield said, “I am sure it will be both successful and shockingly expensive.” A revamped single-family home in that location would go for around $50 million, he said, adding: “$4,000 a square foot is not a fantasy number.”
But their choice to start with this project underscores the challenges the Candys face when developing in the Big Apple. A New York project requires not only financing, but a Rolodex full of expeditors, attorneys, appraisers and construction executives, industry experts said.
“The building code in New York City is … an acquired taste,” said Jay Neveloff, a partner at Manhattan real estate law firm Kramer Levin, who looked at a deal with the Candys in London but didn’t end up working with them. “You need to know who to call.”
Hard Candy
The townhouse project is far smaller than the Candys’ other ventures. The 86-unit, $1.8 billion One Hyde Park, for example, is the most expensive residential development ever built, with prices ranging from $32 million to the $327 million a Ukrainian billionaire paid to combine two units. (Dollar values were converted from pounds using last month’s exchange rates.)
The project, where the Candys teamed up with then-Prime Minister of Qatar, Sheikh Hamad bin Jassim bin Jaber Al-Thani, started sales in 2007.
(The Candys’ spokesperson said One Hyde Park was actually a joint venture between Christian Candy’s CPC Group and Waterknights, a company owned by Al-Thani, despite reports calling the brothers the developers.) She also said there are only two sponsor units left.
But not all of the Candys’ ventures have seen the same level of success, and the brothers appear to be exercising caution lately.
Another London project called NoHo Square, which was planned as 180 luxury apartments, collapsed when financing from a failed Icelandic bank disintegrated. (The Candys sold their share of the project in 2008, according to reports).
CPC also partnered with Qatari Investment Authority on Chelsea Barracks, a London luxury residential development located at a former military site. But the project was scrapped during the economic downturn, leading CPC to sue the investment authority. The litigation has since been settled.
And 9900 Wilshire, a nine-acre condo project the Candys had planned in Beverly Hills, was foreclosed on by its lenders and sold in 2010 to a Hong Kong–based private equity group.
In 2009, Nick told the Wall Street Journal that his company had some $300 million in cash, but just two years later a British paper reported that the firm was in the red to the tune of at least $7 million. The Candys’ spokesperson told TRD last month that there was a “very small operating loss” between June 2011 to 2012, but that the company is on track to be in the black this year.
Nick also acknowledged to the Journal that construction financing is more difficult to obtain than it was when the pair finished One Hyde Park. At that project, the joint venture received almost all of their roughly $1.8 billion in construction funding from a German bank.
Getting financing for New York City projects is especially difficult for out-of-towners, sources said — even if those out-of-towners are internationally known developers.
“The only people who seem to be able to raise money [now] are people who have developed here before,” said Jonathan Miller, founder of real estate analytics company Miller Samuel. “It’s a very specific subgroup” of people for whom financing is available.
That may be one reason why the Candys are starting out with a single-family townhouse rather than a condominium project. “They might have said ‘let’s see what we can do on a small scale,’ ” Miller said.
Or they may simply be daunted by New York prices, sources said.
“They may be looking for undervalued development sites in New York,” said Stuart Saft, chair of real estate at law firm Holland & Knight. “But it is late in the game for that.”
The spokesperson retorted that “both Christian and Nick Candy have very strong global banking relationships with international banks.”
Partnering with an established New York developer would most certainly help the Candys establish a foothold here, sources said.
“You can’t come to New York and just build a building; you need to have some kind of local partner,” said Jordan Barowitz, director of external affairs for the Durst Organization, who was speaking generally and is not in contact with the Candys.
Other sources agreed, citing the idiosyncratic building code and strong unions as potential minefields for a developer without New York experience.
It’s difficult to convince New York developers to join forces on new construction projects, however, because a partnership could result in “diluting the deal,” explained real estate attorney Ed Mermelstein.
“Developers in New York [have] just as big an ego as any Candy brother, or any other developer around the world,” he said.
Another obstacle for the Candys, multiple sources said, is that the brothers have already burned some bridges within the real estate community here.
For example, last year, Nick butted heads with top New York developer Gary Barnett of Extell Development. After scoping out units in Barnett’s posh condo tower One57, Nick told a New York Times reporter that the building did not have enough elevators. Barnett — who declined to comment for this story beyond saying that Extell is not working with the Candys — told the Times that the critique was a “cheap shot,” and revealed emails to the paper that showed Nick opted not to buy at the tower because Barnett did not want him flipping units.
Another source said the pair has rubbed some brokers the wrong way by demanding discounts on apartment prices, citing the publicity they would bring to the building. The spokesperson denied this, saying the Candys are “not about requesting discounts, [but] about paying the true value for a property investment.”
“If the properties are overpriced, it is normal to request a discount whether your name is Candy or any other name,” she said,
Nonetheless, the Candys have continued their search for New York properties. This year, they’ve reportedly checked out the new luxury condo 432 Park Avenue; the famed $100 million penthouse at CitySpire in Midtown; and the $125 million triplex penthouse at the Pierre. They even reportedly bid on a six-bedroom, $60 million unit at Alexico Group’s the Mark on 77th Street, but backed out at the last minute. A call to listing broker Leighton Candler at the Corcoran Group was not returned.
It’s not clear if they are browsing for new digs for themselves — in the past they have maintained a home in Monaco and some reports say Christian owns a unit at One Hyde Park —or are looking for units to flip, as they’d apparently planned to at One57.
Their spokesperson said that in addition to New York, Christian is interested in investing in more projects in Miami and Los Angeles.
Stepping stones
While the Candys are known for their flash today — they are not shy about buying Rolls Royces, and have owned a speedboat dubbed “Catch Me If you Candy,” and a yacht named “Candyscape II,” at various points — they come from middle-class beginnings.
They both attended Epsom College in Surrey, and in 1999 they launched Candy & Candy, which in addition to interior design, also redeveloped and flipped properties. The firm quickly garnered a reputation for stellar design and savvy buys, as well as an uncanny knack for marketing.
The Candys got their start renovating a one-bedroom flat in Earl’s Court, London, in 1995, with a $9,300 loan from their grandmother, according to a Vanity Fair report. After opening Candy & Candy, the two expanded their designs to include interiors of yachts and private aircraft, honing in on all things luxury.
Part of the brothers’ success comes from their confidence and ability to cultivate an “aura of mystery,” Garfield said.
Experts said it’s only natural that the Candys would look to conquer New York next.
“They were one of the first to develop a trophy property,” Miller said. “It makes sense, since the clients are global, [to develop in New York].”
But for now, the 70th Street townhouse may be the stepping stone they need to establish a track record here.
“Now is the right time and theirs is the right product,” Mermelstein said.
But “their reputation precedes them,” he added. “And that can be a hindrance.”