Harlem Church Forms JV in Development Deal

NEW YORK CITY—St. Luke's Baptist Church and Azimuth Development Group have formed a joint venture to redevelop 99-101 and 103-105 Morningside Ave. in a deal that will enable the church to expand. As part of the agreement, the church will return to a condo space nearly double its current size when a planned 11-story, 22-unit condominium development is completed on the site.

Exclusive agents Jesse Deutch, Victor Sozio, and Michael Tortorici from Ariel Property Advisors arranged the deal. In order to increase the footprint of the development to 45,000 square feet and move the project forward, the agents previously brokered the sale of an adjacent property at 369-371 West 123rd St., which closed in July 2014 for $3.7 million.

“Ariel Property Advisors began working with St. Luke's several years ago to identify a partner that would help strengthen and expand its presence at 99-101 Morningside Avenue and enable it to own part of the new venture,” says Deutch, associate VP of Ariel.  “This deal is a great example of a non-profit tapping into the power of today's real estate market to better serve the community. The church will now have a permanent, newly renovated facility and the developer will be able to capitalize on the area's surging residential market.”

And in the next step on the planned development, Eastern Union Funding arranged a $20 million loan for ground up construction on 99 Morningside Ave. on behalf of Azimuth.

Eastern Union's Jeff Seidenfeld brokered the loan, which covers 100% of construction costs and 90% of the client's out of pocket costs. Provided by Madison Realty Capital, the loan features two years interest-only with an interest rate of 11.5%.

“Normally, paying double digit rates is very high, and most of our construction loans are sub-five percent,” Seidenfeld says. “In this case, the final product was cheap equity. This leverage would have been impossible had we gone with a conventional bank, the client would have had to put up substantially more equity and possibly taken out a partnership.” 

Adds Azimuth founder Guido Subotovsky, “We want to bring south of 96^th Street quality north of 96^th street. West Harlem has seen a significant resurgence in the last several years and we see this development as the tipping point of that. We think our project will bring to the neighborhood the kind of quality you'd see in a downtown structure and sets a new bar moving forward.”