Just days after telling analysts that it is still bullish on the New York condo market, Bank of the Ozarks financed yet another project, issuing a $130 million loan package for Simon Baron Development’s conversion at 12 East 88th Street.
Simon Baron bought the 12-story Carnegie Hill building, formerly a rental property, for $105 million in 2014 and converted it into condos. The new financing, brokered by HKS Capital Partners’ Ayush Kapahi, replaces a $120 million construction loan from Goldman Sachs. The package includes both senior and mezzanine debt. RCG Longview is also involved in the financing of the condo conversion.
Around 40 percent of the buildings units are in contract, according to the developer.
Arkansas-based Bank of the Ozarks has emerged as an unlikely and prolific force in the condo financing market as other lenders shy away amid fears of oversupply. It is funding JDS Development and the Chetrit Group’s mixed-use project 9 Dekalb Avenue in Brooklyn and Xinyuan Real Estate’s 615 10th Avenue in Hell’s Kitchen, among other projects.
On Tuesday, the bank’s chairman and CEO George Gleason dismissed concerns over its exposure to the condo market. “I know when someone cuts their prices 3 percent or 8 percent on the listing prices on condos … it tends to freak folks out,” he said during an earnings call. “But the reality is we are typically in the 40s to 50 percent loan-to-cost and the 40s to 50 percent loan-to-value on those projects.”