The Real Deal New York

HFZ completes $500M refi on four-building condo portfolio

JPMorgan, Oaktree provided the loan

November 08, 2016 01:00PM
By Katherine Clarke

From left: 301 West 53rd Street, Ziel Feldman, 88 and 90 Lexington Avenue and 235 West 75th Street

From left: 301 West 53rd Street, Ziel Feldman, 88 and 90 Lexington Avenue and 235 West 75th Street

Ziel Feldman’s HFZ Capital Group completed an approximately $500 million refinancing of four condominium buildings, sources told The Real Deal.

JPMorgan Chase and Oaktree Capital provided financing for the properties, located at 301 West 53rd Street, 88 and 90 Lexington Avenue and 235 West 75th Street. The new loans look to have replaced existing financing from Deutsche Bank in 2013. Both JPMorgan and Oaktree declined to comment on the deal, as did HFZ, and a Deutsche Bank spokesperson wasn’t available for comment.

The deal was brokered by Aaron Appel, Jonathan Schwartz, Mark Fisher and Matthew Collins of JLL TRData LogoTINY. Sources said Howard Michaels’ Carlton Group advised on the deal. Michaels and Appel also declined to comment.

In July 2013, HFZ and partner Fortress Investment Group acquired the four properties, which comprised 743 rental units, for $610 million from Westbrook Partners. The partners have since converted them into for-sale condominiums, and have sold about half the units, an insider said.

There are several reasons why developers may choose to refinance existing interests in condo properties. Such deals are known as inventory or unsold share loans.

JLL's Aaron Appel

JLL’s Aaron Appel

“Hypothetically, you’d do it to get better terms on your inventory loan as compared to your construction loan,” said Scott Singer of the Singer & Bassuk Organization, who was not involved in the deal. “It might be that your construction loan was expiring or that you wanted to monetize the value in the unsold units.”

Singer said the deal was a signal that, even as condo financing has dried up, large commercial banks will still lend on condo projects provided the terms are right.

“The risk that this lender is taking is one of many risks that the construction lender takes,” he said.

JPMorgan was also one of a consortium of lenders who provided a $1 billion loan to finance HFZ’s acquisition of its High Line project at 518 West 18th Street in 2015. The bank also recently provided the senior portion of a $765 million refinancing for the Witkoff Group’s 20 Times Square, according to Commercial Mortgage Alert.

HFZ is looking to finalize a $1.2 billion construction loan for the High Line project, which is being dubbed the Eleventh. The Children’s Investment Fund is among the prospective lenders in advanced talks to provide the financing, sources told TRD last month.

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