UPDATED, 3:02 p.m., March 27: Xinyuan Real Estate’s U.S subsidiary scored a $108 million construction loan for its new condominium project in Hell’s Kitchen, representatives for the developer told The Real Deal.
Bank of the Ozarks, which has become one of the most active lenders in Manhattan’s increasingly tough construction market, provided the loan for the 82-unit project at 615 10th Avenue.
Beijing-based Xinyuan , a publicly traded development firm which operates in the U.S. through its subsidiary XIN Development Limited, paid $57.5 million, or just under $550 per buildable square foot for the site in November 2015. It closed on the deal in January 2016, with the help of a $27 million bridge loan from Bank of the Ozarks. In November 2016, the firm signed Target to be the anchor tenant, with the retailer set to take 29,000 square feet at the base of the seven-story building.
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“The Target lease increases the value of the deal dramatically,” said John Liang, head of XIN, who noted that the firm underwrote the project at $1,975 a foot for the condos before the deal with the retailer. “We’re doing a middle-market product, but will be best in class,” he added. Average pricing on the units will not exceed $2,000 a foot, he said.
The total cost of the project is estimated to be just over $165 million, Liang said, which means that Bank of the Ozarks provided the financing at a 65 percent loan-to-cost ratio. The interest rate is about Libor plus 4.
“Right now, there is absolutely nobody lending on construction loans,” Liang said. “Ozarks is the only one. They get the exposure to all deals.”
This will be XIN’s first Manhattan project. The firm saw success in Brooklyn with the Oosten, a 216-unit condo at 429 Kent Avenue in South Williamsburg. That project reportedly broke the price record for a Williamsburg condo last year, when a penthouse traded for $6.5 million. XIN is also converting the historic RKO Keith’s Theater in Flushing into a 269-unit condo.