MRC grants $ 173 million construction loan for MAG Partners’ West Chelsea rental project – Commercial Observer
Madison Real Estate Capital (MRC) has just concluded a $ 173 million construction loan for the development of 241 28th Street West, learned Commercial Observer. A joint venture between MaryAnne Gilmartin‘s MAG Partners, Atalaya, Safanad and Australian investor Qualities develops the project of 479 units.
MRC provided developers with three-year funding at a loan-to-cost ratio of 65%. Jeff Rosen, Managing Director of MAG Partners, led the financing on behalf of the sponsorship. Maverick capital‘s Adi Chugh negotiated the debt.
“This, in some ways, is a gamble on New York, but it’s also a recognition of the industry’s resilience in the face of the pandemic,” Gilmartin told the CO today. “This project is a project of which I am particularly proud, because it took me a long time to get here. And although I have been involved in financings and closings that have been much more complex – from a real estate perspective – I can tell you that all of the externalities and dynamics associated with the last six months have made this closure a real accomplishment. We really appreciate all of the sponsors including Madison. “
In 2018, L&L MAG signed a 99-year land lease for the West Chelsea site, with plans to build 372,000 square feet of land COOKFOX-Designed property that included retail space on the ground floor. Now that the L&L MAG partnership has separated, MAG Partners is leading the project and this is MAG Partners’ first stand-alone agreement.
When complete, 70 percent of the units at 241 West 28th Street will be at market rate and the remainder will be designated affordable. The project also benefits from a 35-year tax deduction. With construction funding now sealed, development will begin next month and the building is expected to be delivered in 2022.
“We are very pleased to have entered into this $ 173 million loan at a relatively low loan-to-cost ratio with such an esteemed sponsorship group,” Zegen said. “This renowned 479-unit multi-family rental property, located a few blocks from Hudson Yards and other leading technology tenant expansions on the West Side, will be one of the only new multi-family rental projects to be built in Manhattan.” over the next few years. We were delighted to fill a void that would usually be funded by conventional banks, and to bring our flexibility, certainty and conviction.
The deal is one of the few large construction loans to close during COVID, and the sponsorship had to navigate the new debt playground when selecting a lender.
“One complexity was that the conventional lenders just don’t show up to the ball, they’re all frozen,” Gilmartin said. “The usual suspects for us weren’t available to commit, and didn’t believe they could go the distance with us because the future is so uncertain. So there was a smaller pool of potential lenders. J ‘love [MRC] because Josh and his team are in our company; not only are they lenders, but there are builders themselves. They know how to underwrite risk and they understand the value creation associated with development.
“And that’s a rare thing with a lender,” added Gilmartin. “So part of it was their DNA that brought them in and I think their stamina has a lot to do with how they’re wired. They were the perfect loan option for us, given the state of the city, the uncertainty, and for them it was all about sponsorship, as they – like us – believe it’s a moment in the time and that New York is going to get out of there.
The project is close to some trendy projects, notably Vornado ‘s redevelopment of the emblematic former post office of 421 Eighth Avenue. In August, Facebook inked one 730,000 square foot agreement for the whole office part.
“West Chelsea was – before the pandemic – one of the hottest places in all of New York City, and it’s a very difficult place to afford a multi-family building as land prices are extraordinarily high,” Gilmartin said. . “If you only made a direct purchase of the land, you would never draw on a 70/30 [project]; it would just never make sense.
Gilmartin said Edison, who owns the land, did not want to part with his interest in the site, “So, here we have the opportunity to put a nice 22 storey asset online, halfway through, and it’s very hard to imagine anyone else doing what we’re doing”, a- she declared. “We are building this project at the heart of the tech community and, even during the pandemic, Facebook, Apple, Google and Amazon have all overtaken the city. We believe that this particular location is truly the heart of the city’s growth and prosperity.
The agreement represents Safanad’s first multi-family project in New York.
“It was a truly unique opportunity for us to work with great partners and make an investment in the residential New York City area but, more importantly, in New York City in general” Andrew Trickett, a partner of Safanad, told CO. “We looked at this project and its location, and this opportunity is a very good long term bet on New York City. We had a lot of headwinds in the market today, but we have tremendous confidence in MaryAnne and the ability of her team to perform here.
The rental tower is not Atalaya’s first foray into the Nomad market. In 2018, the investment fund provided $ 65 million in preferred stock in $ 315 million in construction financing for Flag Luxury Properties‘ Ritz Carlton Hotel hotel in 1185 Broadway.
For its part, the MRC is actively lending and investing in the context of COVID-19. Sources say the firm has raised more than $ 1 billion in capital since the start of the pandemic.
The MRC’s ability to approach transactions as a lender, but with an owner’s perspective, was ideal for the 28th Street project, Chugh said.
“There is an old saying that goes, ‘You can’t find out about the roads from a road map. You can only learn more about a road by walking it, ”he said. “And I think Josh is the perfect amalgamation of a lender who is also empathetic to the owner / operator side of the business. When I talk to Josh about a deal, I am talking to someone who has a multidimensional understanding of the deal. He understands the agreement from a financial point of view and he understands the agreement from a development point of view. He understands what is needed for a developer to be successful, and then he creates a platform and a deal that gives them the tools to make it happen.
As for the next step for MAG Partners, Gilmartin has its hands full but is excited for the future. In July, she was appointed Mack-Cali Interim CEO, as reported by CO.
“One of the really important milestones for me and my team on this project is that I have derived from my partnership with David Levinson and Robert Lapidus, which has been a two-year success,” Gilmartin said. “I trained MAG partners, which I own 100%, and this project supported me with my other projects. So what’s really exciting about this building is that it’s the hallmark of MAG Partners, which is a fully female-owned development company. With this group of talented people that I recruited from Forest City, I created L&L MAG and have now become MAG Partners, and 28th Street is the first project among many.