Manhattan Mixed-Use Project Lands $79M Financing Deal
- Nov 19, 2019
Real Estate Equities Corp.’s plans for a mixed-use office development at 3 St. Mark’s Place in Manhattan got a boost in the form of a new financing package valued at $79.1 million. REEC secured separate loans from Madison Realty Capital and Hana Financial Group for the approximately 68,200-square-foot project.
The Morris Adjmi Architects-designed project at the corner of St. Mark’s and 3rd Ave. will sprout up in Manhattan’s East Village neighborhood on a three-parcel site for which REEC signed a 99-year, $29.1 million ground lease with Gabay & Ameri II LLC in 2017, according to New York City records. In addition to Class A office accommodations, the 10-story building will include roughly 7,900 square feet of street-level retail space.
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South Korea-based Hana Financial provided REEC with $31.1 million of mezzanine financing and approached Madison Realty Capital to supply a $48 million senior loan for the project. Madison availed itself of the opportunity, drawn in by the sponsorship’s reputation and experience, as well as the increased demand for quality office space in the project’s immediate area.
The area’s growing popularity is evident, as new properties are fetching premium rents. New construction at the $1.3 billion Essex Crossing development and the 63,000-square-foot boutique office and retail building at 141 E. Houston St. caused the average asking office rental rate in the East Village to skyrocket by approximately 67.3 percent to $88.14 per square foot in the third quarter, according to a report by Newmark Knight Frank, marking a cyclical record for the submarket.
Lively Lending Climate Continues
Overall commercial real estate financing in the U.S. is on track to exceed 2018’s total of $597 billion, due in no small part to the fact that debt remains historically inexpensive, per NKF’s third quarter 2019 capital markets report.
Madison Realty has provided a bevy of loans this year, many of which involve mixed-use properties across New York City. The firm came through with a $21.4 million loan for the refinancing of the approximately 78,300-square-foot office and retail asset at 251-73 Jericho Turnpike in Queens and supplied a $23.7 million loan collateralized by a nearly 30,000-square-foot office and retail building at 54 Thompson St. in Manhattan’s SoHo neighborhood.
The company, which had closed more than $1.3 billion in financing and note purchases year-to-date in July, has had its share of big-ticket transactions but doesn’t shy away from the opportunities at the lower end of the financing spectrum. As Josh Zegen, co-founder & managing principal of Madison Realty Capital, told Commercial Property Executive earlier this year, while some funds only want to do big deals, Madison continues to close $10 million and $20 million transactions.