Westbrook Partners took a stake in HFZ Capital Group’s redevelopment of the Belnord, by converting the debt it owns on the property into fresh equity, The Real Deal has learned.
The recapitalization of the gated, 680,000-square-foot Upper West Side apartment complex is somewhere north of $650 million, according to sources. HFZ confirmed the partnership, but declined to comment on the financials of the deal.
Ziel Feldman’s HFZ, which paid $575 million to Extell Development for the site in 2015, has been converting the property’s rental apartments into condominium units as rent-stabilized tenants vacate. Of the 215 units, 95 are currently being converted.
The plan is for all of the units to eventually become condos, and the redevelopment has a projected sellout of $1.35 billion — one of the largest ever for the Upper West Side. The New York state Attorney General’s office approved the offering plan in August.
The 14-story property, located at 225 West 86th Street, was built in 1908.
Nir Meir, managing principal at HFZ, said sales are expected to launch next month, with Douglas Elliman’s development marketing arm handling marketing and sales. He said he expects residents to begin moving into the condo portion, designed by starchitect Robert A.M. Stern, later this year.
“This is the most unique offering — a prewar, turn-of-the-century building with luxury apartments for sale for the first time,” Meir said.
Westbrook, a Midtown-based real estate investment firm led by CEO Paul Kazilionis, already owned an unspecified portion of the debt capital stack. The firm also sold four Manhattan rental buildings, including the Astor and the Metro, to HFZ for $600 million in 2013.
The debt-equity conversion will allow the principals to de-leverage the asset with fresh equity. Meir said there is no plan to obtain more debt for the property.
A Cushman & Wakefield team led by Adam Spies, Doug Harmon and Adam Doneger brokered the sale. Cushman declined to comment and Westbrook could not be reached.
Westbrook is also developing the non-office portion of the St. John’s Terminal site. The firm, along with Atlas Capital Group, sold the office component of the megaproject to Oxford Properties Group and Canada Pension Plan for $700 million in January.
Hiten Samtani contributed reporting.