80/20 Financing Closes in Fort Greene

NEW YORK CITY—An affiliate of the Dermot Company and its partner, Lowe Enterprises Investment Management—acting as investment advisor on behalf of the Commonwealth of Pennsylvania State Employees Retirement System—has closed a $140 million credit enhancement from Helaba Landesbank Hessen-Th ringen under the New York State Housing Finance Agency 80/20 program.

The financing, which was secured by the Greystone Bassuk Group, supports 66 Rockwell Pl., (a/k/a 29 Flatbush Ave.) in the Fort Greene section of Brooklyn. Greystone CEO Richard Bassuk, along with managing directors Jeffrey Levien and Drew Fletcher, secured the funding.

The financing was structured with $90 million of 2010 Series A low floater tax-exempt bonds; $9 million of 2015 Series A low floater tax-exempt bonds and $41 million of 2015 Series B low-floater taxable bonds issued as permanent financing. Proceeds from the financing were used to repay Dermot's existing construction loan and reduce the developer's equity in the project.

66 Rockwell is a 42-story, 326-unit luxury apartment building located on the corner of Flatbush avenue and Rockwell place. A total of 66 apartments at the building have been designated as affordable housing units, rented to tenants whose household incomes are at or below 50% of the New York City area median Income, while 10 of those units are rented to tenants whose household incomes are at or below 40% of AMI.

The remaining 260 units are rented as market-rate apartments. The building also contains approximately 7,000 square feet of retail space and approximately 40,000 square feet of garage parking. 

Says Bassuk, “Dermot has its finger on the pulse of the high-end Brooklyn rental market and at just the right time is bringing to market an amenity-rich, well-designed development with breathtaking views. We approached a broad range of lenders but throughout the process, Helaba was sensitive to the borrower's needs and demonstrated a willingness to make this the right fit for both parties.”

Adds Drew Spitler, a principal of Dermot, “We had goals in mind when approaching the market with this refinancing, and with Greystone Bassuk representing us, we exceeded them all.”

Dermot COO Steve Benjamin notes, “We could have simply approached our existing construction lender to convert to a permanent loan, but we made the right business decision in utilizing Greystone Bassuk to advise us on this transaction.

“Greystone Bassuk was an exceptional partner for this venture,” he continues, “ because of their understanding of the marketplace, their ability to drive lender demand and secure favorable loan terms, and their skill in managing both the private lender and public agency. Working with them actually allowed us to exceed the goals we set for this refinancing." 

The loan contains several unique features such as upfront financing of the Low Income Housing Tax Credit cash flow to be received by Dermot over the next 10 years, and a multi-year earn-out, allowing Dermot to draw additional proceeds as residential and commercial revenue increases.

The 10-year loan term and the amortization schedule (which comes close to approximating an interest-only loan) were both structured, together with an extended IO period, to maximize cash flow after debt service and secure today's advantageous interest rates for a significant period of time.