Knighthead Funding, a Greenwich, CT-based real estate finance company, has provided a $27 million first mortgage construction loan to the developer of a seven-story, mixed-use apartment building located in Forest Hills, NY.
The building will contain 46 apartments, ground floor retail and underground parking. The developer commenced construction shortly after the loan closed and completion is estimated to occur in 2018. The development will replace four existing structures, all of which had been used previously for commercial purposes.
The developer, Paraag Sarva, of Forest Hills-based PSRS Realty Group, and his partners have owned the property since 1984.
The 70-foot-tall building will house 46 apartments comprised of 27 one-bedrooms and 19 two-bedrooms with the average unit size measuring 975 square feet. The ground floor will contain 8,280 s/f of retail.
Each of the upper floors will have eight units, except for the top floor, which will only have six units. A subterranean garage will have parking for 23 cars.
The property is located half a block from Austin Street, the retail strip that houses many boutiques, restaurants, night-life and neighborhood conveniences.
The development is also located only three blocks from the Forest Hills LIRR train station and the 71st Street/Continental Avenue subway station providing access throughout NYC and Long Island.
The construction loan was structured with a 36-month term, a prime-based floating rate and interest only payments.
Commenting on the challenges of financing this project, Jonathan Daniel, principal at Knighthead, said, “The underlying property has been owned by the same partnership since 1984 and has significantly increased in value during those 32 years, but with the current High Volatility Commercial Real Estate (HVCRE) rules, conventional banks were not able to underwrite the “as-is” value of the property as true equity contribution.”
“This is an example of how non-bank lenders like Knighthead are capitalizing on the increased regulatory constraints banks are now facing.”