Icon Realty Management is in late-stage negotiations to score a $425 million construction loan to build a pair of condominium towers on the Upper East Side, The Real Deal has learned.
If the deal closes, the landlord would secure financing from Arkansas-based Bank of the Ozarks and private equity firm Apollo Global Management for the two projects, which are located near the new Second Avenue subway line. Icon is planning to break ground by year’s end on a 30-story, 72-unit tower at 301 East 80th Street and a 19-story, 32-unit building a block north at 301 East 81st Street. Both corner lots now sit vacant.
The loan deal is expected to close by November, sources said. The capital stack consists of a senior loan, mezzanine debt, preferred equity and Icon’s equity, sources said. Condo offering plans have not yet been filed with the New York state Attorney General’s office.
The large-scale ground-up development project is a first for Icon, a Noho-based residential landlord that has said it owns more than 100 buildings in the city, many of them in the East Village and on the Lower East Side.
Icon, led by Terrence Lowenberg and Todd Cohen, filed plans for a 208,500-square-foot tower on 80th Street in 2016 and received approval from the city on Aug. 24 this year, records show. The tower would hold nearly 9,000 square feet of commercial space at the base.
Plans For The 81st Street project were first filed in 2014, but were withdrawn and later re-filed as a larger undertaking. The city approved those plans on Aug. 28, records show.
Both projects have been a long time in the making. Icon began the assemblage in 2007 and bought six low-rise tenement buildings on the site at 1538-1564 Second Avenue for a combined $44.9 million by 2012 – with financing from M+T Bank.
A JLL team led by Aaron Appel, who was recently promoted to head of the New York debt and equity finance team, is brokering the financing.
Aaron Appel (Credit: Catherine Gibbons)
Representatives for Icon and JLL declined to comment, and Ozarks and Apollo could not be immediately reached.
SLCE Architects is the architect of record and Studio Sofield is the designer for both projects, filings show.
Ozarks, a community bank, is one of the city’s most active lenders on construction projects, but provides few loans over $200 million. In one of the banks’ recent bigger deals, it provided $170 million for the Chetrit Group’s retail-and-hotel Project On 34th Street. The sudden resignation of a top real estate executive at the bank has spurred speculation that the lender may soon slow down its deal-making, though it’s denied any change in strategy is in the works.
Apollo Commercial Real Estate Finance, a real estate investment trust affiliated with Apollo Global Management, is also lending $325 million on JDS Development Group and Property Markets Group’s supertall at 111 West 57th Street and $65 million for Extell Development’s East Harlem project.
Last month, Icon reached a settlement with the New York state Attorney General’s office over a months-long tenant-harassment investigation at 70 of its buildings, with the firm agreeing to pay $500,000.