David Werner Real Estate Investments and Metro Loft Management continue working together on office-to-residential conversions in Manhattan. This time, the joint venture partners have secured a $90 million senior first mortgage loan to support the purchase and pre-development of 675 Third Avenue in Midtown South.
The plans call for transforming the 335,000-square-foot Class A office space into roughly 430 rental units.
Northwind Group is originating and structuring the loan through its Debt Fund III. This will mark the third time the private equity firm has financed a deal for David Werner and Metro Loft in the city. The previous two transactions involved two properties of the former Pfizer headquarters to create 1,600 multifamily units at the vacant offices. One of the loans provided by Northwind was worth $135 million at 235 East 42nd Street, and the other at 219 East 42nd Street was given a $75 million loan. So, in total, the three are partnering to launch 2,000 multifamily units.
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"We are excited to deepen our relationship with David Werner and Nathan Berman. 675 Third Avenue is exceptionally well-suited for residential conversion due to its ideal location in Midtown East, excellent natural light, and efficient floorplates," Ran Eliasaf, founder and managing partner of Northwind, said in a statement.
"Having witnessed DWREI and Metro Loft's significant progress at the former Pfizer buildings, we are confident in their ability to replicate that success here.
Eliasaf also noted that NYC's housing shortage, combined with legislative action on affordable tax abatement programs and the City of Yes zoning amendment, which aims to provide more affordable housing, creates more multifamily opportunities in the metro.
John Vavas, partner at law firm Polinselli's Real Estate practice in New York, told GlobeSt. in February that he has noticed an uptick in office-to-resi deals. He noted that he helped close four or five transactions in the past 12 months, including the two Pfizer deals involving David Werner and Metro Loft. Newmark's Adam Spies and Jordan Roeschlaub arranged the 675 Third Avenue transaction.
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