Naftali, Access Land $385M Loan for NYC Waterfront Project
Partners will build three residential buildings near Brooklyn Navy Yard.
A joint venture of Naftali Group and Access Industries has secured $385M in construction loans for a three-building, 561-unit multifamily project on the Williamsburg waterfront in Brooklyn.
The financial package includes a $310M senior loan from Bank OKZ, based in Arkansas, and a $75M mezzanine loan from Barings. Walker & Dunlop arranged the loans.
The partners are planning to build two rental apartment buildings and condos building at 470 Kent Ave., which is in proximity to the Brooklyn Navy Yard in Williamsburg.
The project will go up on the site of a former lumber yard that Naftali acquired for $180M in 2019, one of the last undeveloped sites on the Brooklyn waterfront in Williamsburg.
The foundation for phase one of the project in time to qualify for a 421 tax break, with 30% of the units designated as affordable.
The 421 tax provision, first enacted 51 years ago, offered a property tax exemption for housing projects in NYC that include a percentage of units designated for lower-income residents. According to a study by NYU’s Furman Center, nearly 70% of rental housing built in the past decade in NYC used the tax abatement.
The City Council let the 421 tax break expire at the end of June without renewing it. The expiration of 421 forced multifamily developers in the city to scramble to install a project’s foundation before June 15 in order to be eligible for the property tax exemption, which also required that the project complete construction before June 15, 2026.
A bevy of luxury residential projects are underway in the waterfront area of Williamsburg, which offers spectacular views of the Manhattan skyline.
In August, Domain Companies closed on a $176M construction loan for a 360-unit multifamily development that will feature two apartment towers at 420 Carroll Street on the Gowanus Canal waterfront in Brooklyn.
JLL Capital Markets arranged the financing from Bank OZK for Domain and its partners in the project, including Vorea Group, Silverstein Properties and affiliates of Cantor Fitzgerald.
The waterfront development, now under construction, will include a 20-story tower, a 15-story tower, more than 27K SF of retail space and a publicly accessible connection to the Gowanus Canal promenade.
About a quarter of the apartment units at the project will be designated as affordable housing, reserved for households earning 40% to 100% of the area’s median income.
Domain acquired 420 Carroll from Property Markets Group for $47.5M in 2018. Total development costs are estimated at $295M. Because the foundation for the new apartment towers was put in before the end of June, the project will be eligible to receive the 421 tax abatement.