The Bank of China will provide Ian Bruce Eichner’s Continuum Company a $200 million letter of credit to insure the bonds that will finance construction of his massive Harlem rental tower, The Real Deal has learned.
China’s fourth-largest bank will provide a stopgap for $200 million in tax-exempt municipal bonds administered by the state Housing Finance Agency. In exchange for the bonds, Continuum is required to ensure that 20 percent of the 682 units planned for 1800 Park Avenue will be affordable.
Eichner wasn’t immediately available to comment, but he recently told TRD he plans to pour a footing for the building in March, in order to meet a June deadline for 421-a tax benefits.
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“I left myself plenty of room between March and June to pour one footing,” he said.
The Bank of China’s letter of credit guarantees the bonds should Eichner default. The developer also received a $65 million acquisition loan from the Garrison Investment Group.
The agreement with Garrison became a source of contention in October 2013, one day after Continuum closed on the $66 million purchase from Vornado Realty Trust. Private-equity firm Cerberus Capital Management sued Continuum, claiming the developer had backed out of a deal to accept a bridge loan of equal value.
Eichner told TRD Cerberus offered to provide a loan smaller than he had requested. Cerberus, which declined to comment, dropped the lawsuit late last year.
The Bank of China has is increasingly insuring 80/20 projects, which give the lender credits toward community-development investments.
Late last year, it provided a $480 million letter of credit for Brookfield’s Manhattan West residential tower, according to Commercial Mortgage Alert. The bank also provided a $539 million letter of credit backing the Moinian Group’s 1,174-unit rental tower at 605 West 42nd Street, according to the website.