Chetrit, Clipper Land $115M in Financing for NYC Flatotel Project
- Apr 24, 2013
Chetrit Group and Clipper Equity have taken a major monetary step forward with their plan to add new luxury condominiums to the Midtown Manhattan market. The partners just secured a $115 million loan to fund the $180 million acquisition of the Flatotel, as well as the $250 million redevelopment of the property from a 288-room lodging destination to a 173-residence, mixed-use condominium community.
Chetrit and Clipper snapped up the Flatotel from a joint venture involving Rockpoint Group, Atlas Capital and Procaccianti Group. Meridian Capital Group L.L.C. was aboard to orchestrate the acquisition and construction financing for the property, which stands 47 stories at 135 West 52nd St.
In this post-credit crunch environment, lenders have been eager to support apartment projects–due in no small part to the significantly high demand for rentals–but their interest in endeavors in the yet-to-fully-recover condominium market has not been nearly as strong. However, there are always exceptions, always a standout that captures more attention than the rest. The Flatotel opportunity was just such an exception.
“The desirable midtown location coupled with strong sponsorship and low basis made the deal attractive to the lending community,” Ronnie Levine, managing director of Meridian, told Commercial Property Executive.
The transaction supplied Chetrit and Clipper with a three-year, non-recourse interest-only loan with a floating LIBOR-based interest rate. Additionally, terms of the agreement provide the borrowers with the option to avail themselves of a one-year extension.
With the loan in hand, Chetrit and Clippers’ vision for the Flatotel moves closer toward realization. The partners plan to create the upscale for-sale residences on 37 stories of the tower, while reserving five floors for a 64,000-square-foot office condominium component.
The conversion of the Flatotel may very well be right on time, as demand for condominiums in Manhattan is on the upswing. From the first quarter of 2012 to the first quarter of 2013, sales increased 6.3 percent, according to a report by residential brokerage firm Douglas Elliman Real Estate. And sales prices inched up 1 percent year over year.