The developers behind the Essex Crossing complex on the Lower East Side have secured $466 million in new debt — a major milestone for the 1.9 million-square-foot megaproject at the corner of Delancey and Essex streets.
Deutsche Bank and Square Mile Capital provided the financing to Delancey Street Associates, a joint venture of Taconic Partners, L+M Development, BFC Partners, Prusik Group and Goldman Sachs Asset Management’s Urban Investment Group.
The new financing replaces $455 million worth of construction loans and will go toward stabilizing the project’s second phase, which includes offices, rental apartments and condos.
“We’re almost fully built out at this point,” said Taconic Partners’ Chris Losco. “[The financing] helps us execute the remaining ambition of phase two of this project.”
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Deutsche Bank provided a $285 million loan for the Offices at Essex Crossing, the 350,000-square-foot office component of the project, where Verizon last year agreed to lease more than 140,000 square feet.
It’s a short-term bridge loan that the developers will use to build out Verizon’s space and finish leasing the remainder. Once it’s fully leased, the partners will head back to the market for permanent financing.
Deutsche also provided a $144 million loan for the Artisan, a $263 million mixed-use apartment building. Losco said the loan has a term of more than five years. Square Mile Capital made a $37.1 million condo-inventory loan for the 38-unit One Essex Crossing condo building, which Losco said is a little more than half sold.
Rising interest rates and volatility in capital markets have made it a particularly challenging time to secure financing for megaprojects like this one. Losco said the joint venture largely negotiated these deals earlier in the year, before rates started climbing. He added the partners did trend toward shorter-term debt in an acknowledgement that the market conditions for longer-term financing aren’t ideal.
Essex Crossing, which is expected to cost $1.6 billion to develop, is made up of nine sites with more than 1,000 residences, 350,000 square feet of offices, 300,000 square feet of retail and 100,000 square feet of open space.
The Delancey Street Associates joint venture was awarded the rights to develop the project by the Bloomberg administration following a competitive bidding process in 2013.