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BROOKLYN, NY-The first phase of the $2.5-billion Atlantic Yards redevelopment has begun with a $40.5-million first mortgage loan to two entities sponsored by the Forest City Ratner Cos. The loan, which was originated by Gramercy Capital Corp., permits FCRC to acquire a number of residential and commercial buildings toward the effort.

The project involves the development of a Frank Gehry-designed arena for the New Jersey Nets basketball team as well as an office, retail and residential project at the intersection of Flatbush and Atlantic avenues. Bruce Ratner, president and CEO of Forest City Ratner Cos., owns the team. The bridge loan from Gramercy will be repaid prior to development of the 800,009-sf, 19,000-seat arena which can also be used as a venue for concerts and other sporting events.

The 7.7-million-sf plan, which will take approximately 10 years to come to fruition, also involves the construction of some 4,500 residential units in addition to 2.1 million sf of office space, 3.1 million sf allocated for retail use, open space and parking. The first phase of construction on the arena is expected to begin at the end of this year and be completed in the summer of 2006. The project adjacent to the Atlantic Terminal, one of Brooklyn’s MTA hubs with nine subway lines and access to the Long Island Railroad.

“Gramercy Capital Corp. became involved in this project in the earliest stages of the development and understood our business plan and vision in a way that traditional lenders could not,” says Andrew Silberfein, executive vice president and director of finance for FCRC.

Locally based Gramercy specializes in the origination of structured first mortgage loans on transitional properties, subordinate mortgage participations and mezzanine loans. Since its initial public offering this past July, Gramercy has originated $299 million of investments, consisting primarily of subordinate mortgage participations, mezzanine loans and whole loans.

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