Forest City Ratner said it has closed on $680 million in construction financing from a consortium of banks led by Eurohypo AG for its Beekman Tower residential development in Lower Manhattan, which had been stalled for several months.
Forest City said that construction on the 8 Spruce Street tower, which includes 904 market-rate apartments, will resume next week, and leasing is scheduled for 2010.
The deal comes just a week after Forest City Ratner said its massive Atlantic Yards project would be stalled for several years due to the weakened economy and the inability to find a commercial anchor tenant.
Forest City had been under pressure to get the Beekman project restarted, because the tower includes a 630 student K-8 school that was scheduled to open in the fall of 2009 and will open by 2010.
“It’s especially gratifying in this economic climate to have leading financial institutions show this kind of confidence in our Beekman project,” said Bruce Ratner, Forest City Ratner’s chairman, in a statement.
Assembly Speaker Sheldon Silver, who represents the district, wrote a letter to Forest City in February demanding to know when the project would get moving.
The tower will also include a 21,000-square-foot ambulatory center for New York Downtown Hospital; 1,300 square feet of ground-floor retail space and underground parking for 175 vehicles.
The Eurohypo-led consortium includes Nord/LB, ING Real Estate Finance, Fifth Third Bank of Cincinnati and RBS Citizens NA, along with National Electric Benefit Fund, which will provide mezzanine financing.
Eurohypo, based in Eschborn, Germany, was the fourth-largest syndicator of commercial real estate loans in the world last year, with 7.7 billion euros. The bank has been involved in financing several major U.S. projects, including an $898.6 million loan to develop 15 Central Park West in 2005.
Eurohypo officials said they have a long-standing relationship with Forest City and will continue to help securitize major projects, but only when developers provide a lot of equity.
“I don’t expect I will be doing a ton of this stuff,” said Ben Marciano, managing director for Eurohypo, in the Americas. “We’re just going to be very selective about any development projects.”
Loren Riegelhaupt, aspokesman for Forest City Ratner, said of Eurohypo: “Our team has known them for 10 or so years and while we haven’t financed projects with them before, we have always been in close contact. They had always been interested in working with us and we always wanted to do business with them. The timing finally worked out for us.”
The New York City Housing Development Corp. is issuing the bond financing. However, Forest City Ratner said that $204 million of the $680 million in financing comes from the New York Liberty Bond Program.