Posted May 1, 2019, 5:08 AM
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https://commercialobserver.com/2019/04/i...ers-240m-mezz-lending-debut-on-9-dekalb/
Inside Silverstein Capital Partners’ $240M Mezz Lending Debut on 9 DeKalb
BY CATHY CUNNINGHAM
APRIL 30, 2019
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Last week, JDS Development officially closed a $664 million construction financing for—what will be—Brooklyn’s tallest tower at 9 DeKalb Avenue. As widely reported, Otéra Capital provided the senior mortgage, while Silverstein Capital Partners provided a $240 million mezzanine loan in the deal.
The deal marked Silverstein Capital Partners’—the finance arm of Silverstein Properties—first financing.
Now that the dust has settled post-closing, Commercial Observer caught up with Silverstein Capital Partners President Michael May to hear why the project was a fitting debut.
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“We liked it because it reminded us of the types of deals that Silverstein Properties does,” May explained. “It’s place-changing, neighborhood-changing, complicated, large in scale, pretty in design and near public transportation. It checked a lot of boxes with regard to the type of property that Silverstein would build, and that we would be proud to put our name on.”
When construction wraps in 2022, the 1,066-foot-tall tower will include 425 rental apartments—30 percent of which will be below market rate—150 condominium units and 120,000 square feet of retail. The mixed-use nature of the asset was another draw for the lender.
“We liked the fact that if the condo market is a little bit softer the rental market will still be there; more than half the value of the building is in the rentals,” May explained. “It’s an asset class we—as a company—like, and between the rental of the retail component, the sale of the condo units and the rental of the multifamily units there are multiple things happening at the same time within the same building. This insulates us from some uncertainty that comes from developing a project that takes three or four years to deliver.”
May said that Silverstein feels good about the Brooklyn residential market, though. “While condo sales softened for a period of time in Manhattan–both in terms of absorption and price—we have not seen the same slowdown in Brooklyn,” he said. “It’s a great live-work-play place. Downtown Brooklyn specifically—with its rezoning—has had a huge number of new apartments built, but occupancy is in the very high 90s so new product has been absorbed and well received.”
Plus, “You’ll be able to see [9 DeKalb] from our office building,” he said and laughed. “It’s 1,066 feet tall, similar to the size of the Four Seasons [hotel] we just built as well as 3 World Trade Center and 4 World Trade Center.”
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