Multifamily leads New York City’s top real estate loans

With multifamily rents holding strong in New York, lenders put big money into luxury rental buildings last month. The asset class accounted for half of the 10 biggest real estate loans made in May, including at the Durst Organization’s 960-unit building in Long Island City.

Another large loan refinanced the former HSBC headquarters near Bryant Park, although the bank has decamped to the Spiral building in Hudson Yards. A pair of hotels, a retail condo and a self-storage portfolio rounded out the list of the city’s 10 biggest real estate loans in May.

Here are more details.

Take the money and hold | $450 million | Long Island City

Wells Fargo refinanced the Durst Organization’s construction debt at 29-59 Northern Boulevard, a 960-unit rental building in Long Island City, with $450 million that included $90 million in new financing. One-bedrooms units in the luxury building list for $4,000 to $5,000 per month. Durst had explored selling the building, built in 2022, earlier this year. One-third of units are affordable under the Affordable New York Housing Program, also known as the 421a tax abatement. The loan from Wells replaces M&T Bank as the construction lender.

Office opportunity | $360 million | Midtown South

Bond buyers on the Tel Aviv Stock Exchange supplied $360 million to refinance the former HSBC headquarters building at 452 Fifth Avenue, a glassy office tower overlooking Bryant Park. Discount Investment Corp., the parent company of Property & Building Corporation, which has owned the 600,000-square-foot building since buying it from London-based bank in 2010 for $330 million, issued the corporate bonds on the TASE, allowing it to essentially buy its own senior debt from JPMorgan Chase, the prior senior lender.

Once intent on selling the building, PBC, led by Eli Elefant, retained ownership after Andrew Chung’s Innovo Property Group failed to close on a $855 million contract price in 2021. The property includes a 10-story, Beaux Arts building at the base. In 2022, the building was appraised at $650 million.

HSBC slashed its office footprint to 265,000 square feet from 550,000 after the pandemic, moving to the Spiral building in Hudson Yards developed by Tishman Speyer. 

Double debt deal | $340 million | Mott Haven, Greenpoint

Ares Management refinanced construction debt secured by 460 new apartments at 2401 Third Avenue in the Bronx, and 410 new units at 1 Bell Slip in Brooklyn, both owned by Brookfield Properties. Brookfield has invested heavily in master-planned developments in New York, building 1,350 multifamily units at its Bankside campus in Mott Haven, and 1,200 new units at Greenpoint Landing, where more than 5,000 new units are slated for development, including units classified as affordable under the 421a tax abatement. Rents have held strong in New York. In Mott Haven, at 2401 Third Avenue, units list for $2,900 to $3,900 per month. In Greenpoint, at 1 Bell Slip, one-bedrooms list for $3,800 to $5,500 per month.

Refi, relist | $232 million | Morningside Heights

JP Morgan Chase loaned Brookfield Properties and Urban American Management $232 Million for their massive Morningside Heights rental property at 3333 Broadway, which they are looking to unload. The loan replaced a CMBS loan with an original amount of $245 million, PincusCo reported.

The five connected buildings on the property span 1,193 units — making it one of the biggest apartment complexes in Manhattan. It’s part of the former 4,000-unit Putnam Portfolio that Brookfield bought in 2014 for more than $1 billion, one of the largest apartment deals ever to trade in the city.

Brookfield’s first attempt to sell the property a year and a half ago fell flat and it recently put it back on the market.

Like the phoenix | $212 million | Midtown

Toronto-based H&R REIT refinanced the senior debt on Argent Ventures’ hotel at 1601 Broadway in Times Square with $212 million. The debt deal follows a long financial saga which included a Chapter 11 bankruptcy and the felled ambitions of Vornado Realty Trust and SL Green Realty. One year into the pandemic, which decimated the hotel’s business, Argent bought Vornado’s debt at the property at a major discount. Later, SL Green was forced to sell its ownership stake in the hotel to Argent. The hotel now flies the flag of IHG’s Crowne Plaza brand. 

Grub for Grubb | $150 million | Long Island City

California’s Kennedy Wilson Capital and the insurer Crum & Forster supplied $150 million in construction loans, part of a $212 million financing package, to North Carolina-based Grubb Properties. The developer will use the funds to complete construction of its 417-unit project at 25-01 Queens Plaza North in Long Island City, also known as 41-34 27th Street. 

Lexington loan | $185 million | Midtown

Hudson Bay Capital provided a $155 million loan to refinance the 725-key Lexington Hotel at 511 Lexington Avenue. Andrew Farkas and his partners, MCR Hotels and Three Wall Capital, acquired the landmarked Midtown hotel three years ago for $185 million and folded it into the Marriott Autograph Collection last year after major renovations. 

The 1929-built property had last traded hands in 2011, when DiamondRock Hospitality purchased it for $333.7 million. The loan replaced debt held by HPS Investment Partners.

Retail resale | $120 million | Upper East Side

Goldman Sachs loaned Florida-based TZ Capital $120 million to buy the retail base at Thor Equities’ 680 Madison Avenue on the Upper East Side. ​​The Florida-based investor bought the 34,000 square feet of retail at the bottom of the Carlton House condop for $180 million, about 35 percent off the $277 million Joe Sitt’s Thor paid for the property in 2013.

The Carlton House retail wraps all the way around the front of Madison Avenue between East 61st and 62nd Street. It’s fully leased to Tom Ford, Brioni, Oscar de la Renta, Morgenthal Frederics, Missoni and Asprey.

Seed money | $117 million | Crown Heights

G4 Capital Partners lent Yitzchok Schwartz’s YS Developers $42 million towards acquisition and $75 million in construction debt at a controvesial development site in Crown Heights near the Brooklyn Botanic Garden. 

The developer filed plans to build 300 new condos at 960 Franklin Avenue just as a limited liability company affiliated with YS bought the site for $64 million. The project site has been at the center of tumult for years over concerns from community groups that a condo project would shadow plants at the nearby gardens.

Storage floorage | $83 million | Prospect Park South, Staten Island

PGIM Real Estate refinanced four self-storage buildings owned by Carlyle Group and Sabharwal Properties in Brooklyn and Staten Island. The funding was part of a $100 million financing package, the Commercial Observer reported, and replaces $75.8 million in construction debt from Bank OZK and Santander. 

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