D. Grasso delays 1600 Vine, modifies terms with tenants and lender

Developer David Grasso's proposed 46-story mixed-use tower in the 1600 block of Vine St. has been delayed like so many projects that were supposed to start last year, or the year before.

"We restructured our debt on the property," with lender Hudson Realty Capital of New York, "and bought ourselves two to three more years to build the thing," said Grasso, owner of Grasso Holdings. "Took us six months. It was very painful. We had to pay down part of the principal."

Grasso said he's also in talks with tenants who backed the project. Intercontinental Hotels is negotiating to extend its deal for a year. "Best Buy wants a better deal. And Whole Foods wants a better deal, but I'm not sure I can afford them anymore." He said he's signed an initial letter with another supermarket owner just in case.

Equity investor Grosvenor Investment Management continues to back the project, Grasso says. He's going to try to get city approval for tax-increment financing (TIF) to make the project cheaper to fund.

To keep his people busy during the slowdown, Grasso says he's been consulting with lenders who have started taking over half-built condos and other over-leveraged, under-leased developments. "Everyone in our office who was doing development deals, is working with banks now," he said. "Brian O'Neill and other developers are doing this too. Banks are looking for seasoned professionals to handle complex real estate deals, construction, leasing, property management. Rather than laying off people en masse, I'm changing my focus to asset management and working for other people."