Posted Mar 13, 2017, 11:46 AM
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Developer secures $300 million for downtown Manhattan condo project
Lightstone Group plans to build an 800-foot-tall spire at 130 William St.
The Lightstone Group secured a $305 million loan to build an 800-foot-tall condo tower in lower Manhattan.
The company sourced the construction loan from Mack Real Estate Credit Strategies, a specialty lender. With financing in place, the tower will begin rising at 130 William St. in September, Mitchell Hochberg, the president and chief operating officer of Lightstone told Crain's. The project, which will likely be completed by fall 2019, will cost about $600 million to erect.
Developers across the city have raced to construct condo spires with apartments costing millions of dollars apiece. With so many similar projects on the market, observers feel there is a glut of pricey units and developers will have to slash prices to sell apartments, possibly thrusting projects into financial turmoil.
Hochberg said 130 William St. will be different. Lightstone worked through a complex process of assembling several properties to create the development parcel and the firm was able acquire the sites for below-market land prices, giving it leeway to sell the units in the building at a lower price than the competition.
"I think the high-end market is challenged right now," Hochberg said. "But we do think that if you're priced well, which we think we will be, and located well and deliver a product that has value and good design, there's always going to be a lot of people who are interested in buying."
Lightstone aims to sell units at an average of about $2,000 per square foot, a high price tag but still below the $3,000-plus per foot that other luxury projects are seeking.
Half of the building will also be comprised of studios and one bedrooms, smaller apartments that will carry a lower price and will be accessible to a broad range of buyers.
"You have a lot of young, single people downtown and moving to the neighborhood because it's developing as a community and it's more affordable," Hochberg said.
Major banks have pulled back from financing condo developments as concerns about supply have grown. Richard Mack, a real estate investor who founded Mack Real Estate Credit Strategies in 2014, said he felt comfortable lending to Lightstone because of 130 William St.'s lower price points and the developer was putting in half the money for the project in equity. Mack founded his firm when he saw a pullback in lending at the time and an opportunity for specialty financiers.
"Even if the condo market continues to turn downward, we felt comfortable," said Mack, noting that the building could sell out for as low as $1,000 a foot and his firm would still recoup its loan. "This is a strong sponsor with the balance sheet and the acumen to complete this project successfully."
Lightstone initially planned to build a 500-foot tall tower at the site but recently reversed course in favor of a much taller spire.
"We wanted our building to have spectacular views," Hochberg said. "Residents will be able to see the East and Hudson Rivers and the Statue of Liberty. It's a 360-degree panorama."
Most super tall towers have featured ultra-pricey penthouses that cost much more per square foot than lower units. "We'll have a number of beautiful penthouses but they're not going to be even close to the numbers for the rock star penthouses you hear about in places like Billionaire's Row," Hochberg said.
Lightstone is in the process of choosing an architect and finalizing the design for the project.
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