It was a high-stakes deal.
New York-based Hybrid Capital beat out the competition to secure $12.5 million in acquisition financing for a former illegal gambling den in Manhattan’s Chinatown, the brokerage firm told Mortgage Observer.
The Los Angeles-based Chinese-American lender Cathay Bank provided the acquisition financing, according to city records.
Hybrid brokered the three-year loan on behalf of a partnership between commercial real estate developer Albert Malekan and the New York private investment company Empire Capital Holdings. The loan carries an interest rate in the low 4-percent range and interest-only payments for the full term, said Hybrid’s chief executive officer Bobby Bakhchi, who declined to name the lender.
“The stakes were high for the client because there was a time-is-of-essence $2 million hard deposit,” he said. “So not only did we have to negotiate advantageous terms for the sponsor, but it was imperative that we identify a lender that we were certain could execute. This was especially challenging given that there was very limited information regarding the tenancy and cash flow.”
One of the complications in the transaction was that estoppel certificates—used in mortgage negotiations to establish financial obligations that could affect the settlement of a loan—could not be secured, Mr. Bakhchi noted.
Mr. Malekan and Empire Capital completed their $20.2 million purchase of the six-story office and retail property at 35-37 East Broadway from the U.S. government in late June.
The Feds confiscated the property from its former owner Won & Har Realty Corporation in August 2013 following a raid exposing illegal poker games and computerized slot machines on the premises, according to previous news reports.
The new owners won the 24,157-square foot building at auction in March 2014 against several other bidders, including Zar Property, Keystone Equities and E&M Associates, The Real Deal reported in March.
Mr. Malekan and Empire Capital acquired 35-37 East Broadway at “almost full vacancy” and are now in the process of upgrading and repositioning the property to attract new tenants, according to Mr. Bakhchi.
The former attorney said his firm beat three other brokerage shops vying for the deal, including some of the leading firms in Manhattan.
“Our lender needed the confidence in the asset and the faith in the sponsorship, which we were able to successfully communicate thanks to our strong relationship with the lender,” Mr. Bakhchi told MO. “We were very pleased that we were able to deliver for our client.”