Banks lend on residential projects, but only to a select group
Even in these difficult times, a number of financially sound domestic and foreign financial institutions have affirmed their support of the New York City condominium and residential rental marketplace by providing construction financing for a limited number of new projects.
Last month, a consortium of four banks joined together to originate a $135 million construction loan for one of Manhattan’s most expensive new condos, on West End Avenue. The financing was led by Bank of America, Helaba Bank, Capital One and New York Community Bank. The group provided a two-year construction loan to Gary Barnett’s Extell Development for the 20-story, 27-unit condo tower, under development at 535 West End Avenue, at the corner of West 86th Street.
The complex transaction required the developer to have approximately 40 percent in equity for the project. At the time of the initial funding of the loan, more than 25 percent of the units were under contract for sale, with deposits of 20 percent of the purchase price. Prices for condo units in the building start at $8.75 million.
In Brooklyn, one of the nation’s largest commercial banks provided a $35 million construction loan for a residential rental building under construction on Myrtle Avenue in Downtown Brooklyn. The bank and the developer asked to remain anonymous.
In both instances, these loans were made to well-established experienced developers who have long-standing relationships with the lenders.
Because of the current state of the market, New York City can expect to see financing for a limited number of residential projects over the next 12 to 18 months.
Michael Stoler is a columnist for The Real Deal and host of real estate programs “The Stoler Report” and “Building New York” on CUNY TV and on WEGTV in East Hampton. His radio show, “The Michael Stoler Real Estate Report,” airs on 1010 WINS on Saturdays and Sundays. Stoler is a director at Madison Realty Capital as well as an adjunct professor at NYU Real Estate Institute, and a former contributing editor and columnist for the New York Sun.