Madison Realty Capital (MRC) provided first and second mortgage financing totaling approximately $124 million for the acquisition and future renovation of a 15-building, 175,000s/f portfolio of residential and mixed-use properties in the East Village.
Josh Zegen, Co-Founder and Managing Principal of MRC, said, “This portfolio of properties in such prime locations in the East Village would be nearly impossible to replicate in today’s market, particularly at an excellent basis like what was achieved here.
“In general you see single building sales or small portfolios, not big bulk sales like this one, so it’s truly a one-of-a-kind opportunity.”
“We’re excited to offer a customized loan package to help the borrower enhance the value of the portfolio. In this case, we were able to provide a one-source capital solution by participating in various tranches of the capital stack, which enabled the borrower to complete the acquisition, and to proceed with his plan to renovate and reposition the portfolio.
“We believe the borrower has a great opportunity here, considering the portfolio has been undermanaged and offers a significant market-rate component.”
The borrower is Raphael Toledano’s Brookhill Properties. The portfolio has a mix of studio and one-bedroom units, and offers potential for significant value appreciation through the renovation and repositioning plan.
MRC worked with the borrower to provide a flexible financing solution to facilitate the acquisition, a complex off-market deal with long-term family owners.
Going forward, the borrower plans to update common areas of the buildings, renovate residential units to maximize square footage, and lease up vacancies.
“On the lending side of MRC’s business, our focus is on funding complex, time-sensitive middle market transactions like this major portfolio deal. We are active in special situation real estate lending throughout Manhattan and the outer boroughs, so we’re deeply familiar with all the neighborhoods and get up to speed quickly,” Zegen added.
Including this transaction, MRC has closed 24 debt investments totaling $590 million so far in 2015, consisting of special situation loan origination opportunities and loan acquisition deals.
The firm is on pace to complete more than $1 billion of debt and equity transaction combined in calendar year 2015.