To build New York’s skinniest supertall residential building, Madison Realty Capital and Cottonwood Group have lent a hefty $180 million to Boris Kuzinez’s Five Points Development.
The Israeli developer of the 56-story tower at 262 Fifth Avenue drew the ire of the New York Times’ architecture critic for blocking views of the Empire State Building, and of Manhattan’s borough president for applying to create 18 more parking spots than the five allowed by zoning.
Still, the project and its financing show the industry’s confidence in demand among the ultra wealthy for units in tall, narrow buildings, a trend birthed in 2015 by Harry Macklowe’s 432 Park Avenue.
“As banks pull back, we continue to execute on our strategy of identifying opportunities to provide more senior financing,” said Madison Realty co-founder Josh Zegen, which lent the project $130 million in three chunks. Cottonwood completed the funding with a $50 million mezzanine loan, Zegen said.
At just 49 feet wide, Kuzinez’s building measures half the width of Michael Stern’s 111 West 57th Street, which had been the city’s skinniest building above 40 stories.
Five Points’ tower, at the southwest corner of West 29th Street in Nomad, is expected to top out at 860 feet. Each of the skinny supertall residential buildings on Billionaires’ Row exceed 1,000 feet.
In addition to a $90 million construction loan, a Madison Realty affiliate provided $20 million in mezzanine debt, secured by ownership of the company developing the building, and $20 million in senior debt, replacing debt from Maxim Capital Group, records show.
The project will be the first in the U.S. for Yuri Grigoryan, the Russian architect whose firm Meganom worked with Kuzinez on developments in Moscow. Five Points bought the site in 2015 for $17 million.
In May, Zegen told The Real Deal that the slowdown in commercial real estate lending by banks provided an opportunity for alternative lenders like his, which are known for higher rates and tougher terms.
Zegen identified branded residential projects as especially attractive. His company lent $340 million to the Ritz-Carlton Residences project in Palm Beach Gardens. In New York, Madison recently sold its debt at Gregg Singer’s 25-year quest to redevelop the former P.S. 64 in the East Village into a dormitory.
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