From left: David LaRue of Forest City Enterprises, 8 Spruce Street and DKLB BKLN
Forest City Enterprises and National Real Estate Advisors announced agreements to restructure the financing at 8 Spruce Street, the Frank Gehry-designed 76-story rental tower in Lower Manhattan and at DKLB BKLN the luxury tower in Fort Greene, Brooklyn, saving the companies hundreds of millions of dollars in debt payments.
The development is key for Forest City, the parent firm of Forest City Ratner, as this $876 million rental tower, formerly known as the Beekman, was under pressure to bring in enough renters to become profitable in a market that is just getting its sea legs.
“By extending the bank credit facilities, it allows for additional time for economic conditions and rents to further improve before refinancing is necessary,” said David LaRue, CEO of Forest City Enterprises, in a statement.
Washington-based NREA, on behalf of the $9 billion National Electric Benefit Fund, said it will increase its stake in 8 Spruce Street to 49 percent from 30 percent, by converting $110 million in mezzanine debt into equity. The NEBF fund is one of the nation’s largest pension funds.
Forest City, the parent firm of Atlantic Yards developer Forest City Ratner, said it also reached a deal to modify its credit line with a six-member group of banks, led by Germany’s Eurohypo. Under the new agreement the credit line will decrease to $539 million from $605 million and the maturity has been extended until July 1, 2016.
The total combined debt on the property has dropped to $539 million from $715 million and Forest City’s share of the debt will fall to $275 million from $500 million.
A spokesperson for Forest City did not return calls for comment, but in the company’s fiscal first-quarter conference calls, Charles Ratner, Forest City’s chairman of the board, said that 202 of the building’s 903 units were leased by the end of May and that 100 of the units were already occupied.
At DKLB, the 365-unit Costas Kondylis-designed building, formerly known as 80 Dekalb, NEBF’s $30 million mezzanine loan will be converted into a 49 percent equity stake. Bank financing at the building, through Wells Fargo and Germany’s Helaba Landesbank, will be reduced to $104 million from $117 million, while the maturity date on that debt will be pushed back two years.
Rentals at DKLB start at $2,185 for a studio apartment and the first two months are free, according to Streeteasy.com.
Forest City’s share of the debt at this property will fall to $53 million from $147 million.