CBRE Orchestrates $380M Financing Deal for NYC’s Chelsea Market

The popular NYC destination Chelsea Market underwent a $380M financing deal orchestrated by CBRE for Jamestown Properties.

August 12, 2011
By Barbra Murray, Contributing Editor

Financing to the tune of $380 million has been put in place for Chelsea Market, the popular 1.2 million-square-foot mixed-use destination in Manhattan’s Chelsea district. CB Richard Ellis’ Capital Markets Group orchestrated the transaction on behalf of Jamestown Properties as part of the recapitalization of the property.

“Lending on Manhattan assets is seen as less risky than other markets and that’s been evident through the downturn,” Dan Fasulo, managing director with global commercial real estate research and consulting firm Real Capital Analytics, told Commercial Property Executive. “Of the troubled assets we had in the country, Manhattan had the highest recovery rate for lenders when there was a default. It’s proven to be rather resilient versus other markets.”

The 3.8-acre, full-block office and retail complex at 75 Ninth Ave. features a 225,000 square-foot retail market and 975,000 square feet of office and studio space in 15 structures, the first of which opened in the 1890s to house operations of the National Biscuit Co. Atlanta-based Jamestown became part owner of the asset in 2003, when it acquired a majority stake from a team involving Angelo Gordon & Co. and Belvedere Capital in a transaction valued at, according to New York City records, $280 million. Today the property is 99 percent occupied and home to such high profile office tenants as Google, Major League Baseball, The Food Network and Time Warner.

With the assistance of CBRE, Jamestown, a related entity of Cologne, Germany’s JAMESTOWN Immobilien, was able to obtain the loan from German bank Landesbank Baden-Wurttemberg. News emerged in Feburary that Jamestown was reportedly buying-out its partners in Chelsea Market.

German connection or no, Landesbank is hardly taking a major gamble in providing Jamestown with financing for Chelsea Market. The asset has all the features that lenders near and far seek when doling out real estate loans these days. “They are looking for a great building and a great sponsor, both of which are present at Chelsea Market,” Fasulo said. And location counts, too, of course.

Manhattan is one of the top target markets for foreign investors, and lenders from all over are keen on the city as well. “We’ve always had foreign lenders active in Manhattan, but they certainly have, over the last 12 months, picked up their activity, whether it’s the German banks or the Chinese or the Safra family,” he said.

Jamestown has big new plans for Chelsea Market. The company is seeking a zoning change to accommodate the addition of 359,000 square feet.