- Loans for $219 million coming from diverse group of investors
- Luxury units would enter a market already crowded with choices
A luxury-condo project planned for the lower Manhattan site of what was once to be the “Ground Zero mosque” has received $219 million in financing from an international consortium of lenders, paving the way for 50 high-end units to enter a New York market that is growing heavy with them.
Developer Soho Properties, led by Sharif El-Gamal, said the project known as 45 Park Place has received a senior construction loan totaling $174 million from a syndicate that includes Malayan Banking Bhd., Malaysia’s top lender; Warba Bank of Kuwait and Intesa Sanpaolo SpA of Italy, the developer said in a statement Thursday. An additional $45 million in mezzanine financing is being offered by MASIC, a Saudi investment company.
The diverse patchwork of lenders signals that international investors still see New York as a haven even as the luxury-home market stalls amid an avalanche of new supply and more-traditional sources of capital for projects scale back. This year, 5,126 newly built apartments will be offered for sale, the most since 2007, according to Corcoran Sunshine Marketing Group. Of those listings, 63 percent are priced in the “luxury” range, defined by the brokerage as $2,400 a square foot or more.
The financing deal is “indicative of what’s going on in the market -- there’s a lot more pushback from the past go-to sources for financing,” said Jonathan Miller, president of New York appraisal firm Miller Samuel Inc. “Since early 2016, lenders in this property class have begun to pull back.”
Soho Properties plans a glass tower that will include at least 15 full-floor units of 3,200 to 3,700 square feet (297 to 344 square meters), El-Gamal said in September. Prices at the building will average more than $3,000 a square foot, he said at the time.
Construction on the 43-story, 665-foot (203-meter) building is expected to begin in the third quarter and be completed in 2018, according to the developer’s statement. The building’s units will be marketed by Stribling.
“Our vision for the neighborhood and location is validated by our lenders’ confidence in the market and enthusiastic support for 45 Park Place,” El-Gamal said in the statement.
El-Gamal originally intended to build an Islamic center and mosque at the lot, two blocks north of where the former World Trade Center towers stood. Protesters called the project the “Ground Zero mosque” and said it didn’t belong near the site of the deadliest terrorist attacks in U.S. history. That plan was shelved in 2011.
Commercial lenders are getting stingier when it comes to funding U.S. real estate developments and are proceeding with caution as the specter of slowing economic growth shakes investor confidence in the property market.
A condo-and-retail project that might have gotten a senior loan covering as much as 65 percent of the construction cost last year would now have trouble obtaining funding for 50 percent, if anything, said Sam Zabala, managing director in the capital advisory division of brokerage Eastern Consolidated.
In the past six months, “on the development side, the construction side, the senior lenders have dialed back their leverage, if they’re in the market at all for this type of product,” Zabala said Thursday on a panel at the Bisnow New York Capital Markets conference in Midtown.
Investing in a Manhattan development may be an attractive bet for banks in Middle Eastern countries where oil prices have fallen, and in Europe, where the currency is struggling, said Jim Costello, senior vice president at research firm Real Capital Analytics Inc.
“The world is awash in capital looking for yield of any sort,” Costello said. “We may look at it too closely because we’re in New York, but to the rest of the world, New York looks relatively safe. The option of making a loan here compared to other options worldwide is still attractive.”