Meridian Capital Group negotiated $228.5 million in construction financing for the condominium conversion of the former Flatotel in New York City to residential and commercial condos on behalf of a partnership between Chetrit Group and Clipper Equity.
The two-year, non-recourse, interest-only loan features a floating LIBOR-based interest rate and a one-year extension option.
Meridian executive vice president Aaron Birnbaum, and vice president Emanuel Westfried negotiated the transaction. Source said the lender was Deutsche Bank.
The Chetrit Group and Clipper Equity team plans to convert the asset into a five-floor boutique office condominium and a 37-floor luxury residential condominium.
A 55,000 s/f office condo component will be located on floors two through seven and approximately 109 residential condominiums will span floors eight through 47.
The total project cost is presently estimated at $300 million. Sales have commenced and have exceeded $2,000 per square foot.The property is located at 135 West 52nd Street, between Sixth Avenue and Seventh Avenue.
The Chetrit Group and Clipper Equity team acquired the property in 2013 from a venture between Rockpoint Group, Atlas Capital and Procaccianti Group.
Both parties have significant experience with conversion and development projects in the New York metro area including the Empire Hotel, Hotel Chelsea, BellTel Lofts and Columbus Square projects. “Meridian initially placed the acquisition financing last year and worked with the sponsor on refinancing with a construction loan,ˮ explained Westfield.
“The project has enjoyed a significant level of pre-sales and construction is well underway and being funded with equity, making this an attractive opportunity for lenders.”
The broker said Meridian was able to identify several capital sources interested in financing the transaction on a non-recourse basis.
“We ultimately chose to move forward with the lender that provided superior economic terms coupled with the flexibility that will enable the borrower to best execute their business plan,” he added.