<Updated 12:30 pm EST> Chelsea Now reports that General Seminary is in discussion with the Brodsky Organization to sell the Desmond Tutu Center, a conference center owned by the Seminary.
The Brodsky Organization has already purchased several buildings that formerly belonged to the seminary some on the Close itself. These include apartments across 21st Street from the Close, and two buildings on the west side of the quadrangle including one of the first two buildings of the Seminary. Brodsky also owns and developed the condominium project on Ninth Avenue that also houses the Seminary's library.
All of this is part of General's “Plan to Choose Life,” which, as Chelsea Now says, is a three-step plan to liquidate real estate in order to eliminate $40 million in debt, rebuild their endowment and balance their budget, all with the goal of strengthening their core mission, “to educate and form leaders for the church in a changing world.”
Update: A letter to the GTS Commnity and Alumni from President Lowrey Lang and Associate Dean Patrick Malloy describes the transaction in detail.
Winnie McCroy reports:
Chelsea residents are saddened, but not surprised, by the recent discovery that the real estate developer and investor Daniel Brodsky and the Brodsky Organization is in negotiations to buy the Desmond Tutu Center, a conference center and hotel owned by the General Theological Seminary (GTS).
“We are still in negotiations, so my hands are tied as far as commenting on that,” said Bruce Parker, the GTS’s associate vice president for external relations in a February 20 phone call. Representatives at the Brodsky Organization also declined to comment on the sale, but public records indicate that, although no deed transfer has been recorded, Brodsky has already obtained an easement and development rights at the site.
But neighbors admitted that the sale did not come as a surprise. The 50,000 square feet center features two large conference rooms and 60 hotel rooms, and is valued at $30 million. And despite a 2005 agreement with the city that the rooms would be open only to those affiliated with the GTS, local residents have complained for years that the Tutu Center has operated as a hotel.
The Desmond Tutu Center is comprised of three adjacent, red-brick, neo-gothic properties at 180 Tenth Avenue between 20th and 21st Streets that were joined to created a larger facility. Like other properties in the Seminary’s “Close” (or campus), the Center contains many religious architectural features — including ornate embellishments and stained glass windows.
The Landmarks Preservation Commission protects all of the buildings, but that will likely not hamper Brodsky’s plans. While there is no indication at this time as to what the Brodsky Organization will do with the property, they will likely go the same route as with the other properties recently purchased from GTS. Currently being converted to condos are 422 West 20th Street; The West Building; and 445 West 20th Street, which recently sold for $18.5 million.
The Brodsky Organization is also set to break ground on an eight-story luxury condominium building at the current site of the GTS tennis courts, adjacent to the West Building.
The letter from Lowrey and Malloy details the complexity of the plan. Hoffman Hall, including the refectory and the new conference and breakout rooms will not be part of the sale.
The hotel section will still be available to the Seminary.
Presuming we close on the final restructuring transaction, the leveraging of the “hotel” part of the Desmond Tutu Center, we can expect that the endowment will grow to be as high as $30 million (including the remuneration we expect to gain from the development of West Building). Moreover, all M&T bank debt will be eliminated and we will have dropped our annual cash loss from as high as $7 million annually to an expected $3 million for next year. With the other cost reductions (including offsetting investments to be made in our mission) our plan calls for a $2 million loss in 2013/14 and a $1 million loss in 2014/15. The good news is that with the planned cost reductions, our new operating reserve should be able to cover approximately three years of operating losses, which should fund enough time to allow GTS to formulate a new vision for the 21st century and to develop a plan to balance the budget.
While we have made progress, we do have one critical final transaction to complete. The last and very important financial component of the Plan to Choose Life is to eliminate debt and rebuild the Seminary’s endowment by leveraging of the “hotel” portion of the Tutu Center. A Letter of Intent has been signed that involves separating the hotel part of the complex from Hoffman Hall—with only the guest rooms and hotel being purchased by outside investors (with GTS retaining a beneficial interest in the ongoing profits of the hotel). Hoffman Hall itself, including the conference and breakout rooms, and the refectory are not being sold and will remain under the sole ownership of General Seminary. Since the buildings that are part of the present Tutu Center share infrastructures, it was far less expensive to divide ownership of the life safety and electro/mechanical systems through the creation of two individual property units. Accordingly, this is a very complex transaction not only needing extensive legal, architectural and engineering work but needing Attorney General approval. God willing, we expect a closing with the new hotel operator this summer.
It is very important to note that this arrangement will allow ongoing use of the hotel and conference center in substantially the same, if not improved, manner as GTS has used it in the past—improved because instead of being driven by the need for profits, Hoffman can now be used as a center for Seminary programs and continuing education. Income from our endowment will support the Seminary’s mission instead of relying on the ups and downs of hotel profitability. We will still be able to use Hoffman for events and meetings in conjunction with the hotel which will continue to generate revenue streams but we will not be beholden to this usage as in the past.