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$730M loan bundle funds slew of NYC projects

Ladder Capital to offer investors commercial real estate collateralized loan obligations

From left: Robert Mercer with 48-05 Metropolitan Avenue and Gary Barnett with 17 West 60th Street (Getty, Google Maps, Bulado General Contractors Corp)
From left: Robert Mercer with 48-05 Metropolitan Avenue and Gary Barnett with 17 West 60th Street (Getty, Google Maps, Bulado General Contractors Corp)

A Ladder Capital subsidiary will oversee the sale of $730 million in collateralized loan obligations, some of which will help fund four midsized development projects in the city.

Of those, $55 million will go to billionaire hedge funder Robert Mercer’s industrial project in Ridgewood, Queens, which he owns with his son-in-law George Wells and Ryder Washburn, a prop-gun supplier to film and television productions.

The trio bought 48-05 Metropolitan Avenue out of foreclosure in 2016 for $15.8 million, then plowed $76 million into construction of a 133,000-square-foot industrial and office building, according to public records and ratings agency Morningstar DBRS. Their loan will go toward finding and outfitting tenants.

The building is 35 percent occupied by two tenants: prop-car rental company Picture Car Service, which leases 52,000 square feet and is affiliated with the owners, and Enterprise Rental Car. A stunt-training rehearsal studio also lists the building as its address.

Cushman and Wakefield will market the property, which is four years into a 25-year tax abatement from the New York City Industrial Development Agency, per Morningstar.

Collateralized loan obligations, or CLOs, are close cousins of commercial mortgage-backed securities. Rather than securitize mortgages, as CMBS offerings do, CLOs sell pools of private debt on properties undergoing transitions in the marketplace and are considered riskier investments than securities backed by mortgages.

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Extell Development will use $44 million to refinance debt at 17 West 60th Street, a 77,000-square-foot building recently leased to the Shefa School, a private Jewish day school. The building sat vacant for 10 years while Extell’s vision for a luxury condo development at Columbus Circle faded.

The Shefa School will be responsible for the substantial renovations needed. It has raised $65.7 million from city government bonds and will contribute $10.8 million in equity, per Morningstar. The 99-year ground lease will provide Extell with $2.6 million annually. Yearly tuition at the school, founded in 2014, is $68,300.

As part of its CLO offering, Ladder Capital will sell a $30 million loan it made to a joint venture of Angelo Gordon and Premier Equities to purchase 2875 Broadway, a 31,000-square-foot office building in Morningside Heights, this month for $35 million.

Columbia University vacated the building after finishing its Manhattanville campus. The seven-story building is unoccupied, according to Morningstar. The property has 29,000-square-feet of air rights available to sell or use to redevelop the site.

Hudson Companies will use $24 million from Ladder’s debt bundle to refinance 315 Meserole Street, a 92,600-square-foot retail and office property in East Williamsburg. The building was about 29 percent occupied as of July, according to Morningstar. Hudson Companies bought the warehouse there in 2016 for $27.8 million, then spent $24.4 million to convert it to an office complex.

Finding tenants for the building, which was delivered just before the pandemic, will be a test, given the city’s office market. One potential tenant withdrew its interest in leasing 15,000 square feet following mandatory pandemic closures, Morningstar reported.

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