Unfavorable financing conditions didn’t stop a joint venture from landing a large debt package to recapitalize its industrial complex in the Bronx.
Andrew Chung’s Innovo Property Group and Affinius Capital — formerly Square Mile Capital Management — scored the $334 million debt package at 2505 Bruckner Boulevard, the Commercial Observer reported. Bank OZK provided a $250 million senior mortgage, while PIMCO gave the joint venture an $84 million mezzanine loan.
Cushman & Wakefield’s Gideon Gil and Lauren Kaufman arranged the debt along with a Newmark team led by Adam Spies and Adam Doneger.
In April 2020, Arkansas-based Bank OZK provided a $305 million construction loan for the property, partnering with EverWest Real Estate Investors on the financing. The property includes 28- to 32-foot high ceilings, 106 loading doors and 664 interior parking spaces.
Late last year, Innovo and Affinius brought in Amazon to lease 569,000 square feet at the large logistics center, which spans nearly 1.1 million square feet across two stories. The deal, which accounted for one of New York City’s largest industrial leases last year, came after Amazon spent much of the year looking to trim its industrial holdings in an effort to cut costs.
The e-commerce giant took the first floor of the complex, which was completed earlier in 2022. The remaining 499,000 square feet remains available, according to the property website.
The industrial property is on a 20-acre site once home to the Whitestone Multiplex Cinemas, tucked between the Westchester Creek and Bruckner interchange.
Innovo acquired the site from Extell Development in 2017 for $75 million as Chung’s firm pursued a mission to acquire and develop last-mile warehouses in the outer boroughs.
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New York City’s industrial leasing boom cools off
The recapitalization brushed up against several headwinds. First, the rising interest rates have made it difficult for owners to land financing across the commercial real estate board. Second, the red-hot industrial market of the early pandemic is cooling off.
In the first quarter, demand for space in the city’s industrial sector dropped to pre-pandemic levels, according to CBRE. There was only 730,000 square feet leased in the first quarter, fewer than half the square footage leased in the prior three-month period.
— Holden Walter-Warner