Doral Bank Bets on Senegal
Manhattan below 96th Street has not been home to much in the way of multifamily development of late, as high land prices have pushed out most non-condominium development in prime areas.
That—and other facts—make the $42.5 million non-recourse construction loan that the developers of luxury rental building 227 East 44th Street just received all the more interesting.
Avison Young arranged the loan, from San Juan, Puerto Rico-based Doral Bank, on behalf of a partnership among New York-based Pride Builders, a construction management firm run by Adam Gordon, investor Isaac Yeffet and the Government of Senegal, which is building the 19-story luxury rental building. The bottom two floors will also housea new U.S. Embassy for the Republic of Senegal, relocated from a Harlem location.
Last December, the government of Senegal, which had owned the entire two-parcel site, contributed its interest in the land to an LLC linked to Pride for $25 million, according to city records.
A complex ownership structure (50 percent is now controlled by the Senegalese Ambassador to the U.S., through a Delaware special purpose entity) actually enabled the development by “obviating sovereign immunity issues,” explained David Eyzenberg, a principal at Avison, who structured the financing with colleague Aaron Prager.
“The government’s contribution of the land and developer’s cash contribution created a large cushion for the lender to provide financing against,” Mr. Eyzenberg said.
On top of that, the government bought the properties for a mere $23.9 million in 2009, records show.
Now, with the non-recourse loan in place, the development of glassy luxury building—with terraces on every floor—can proceed.
The building is slated to hold 68 units with studios, one-, two- and three-bedrooms as well as amenity space. Proximity to the United Nations and New York University hospital as well as the dearth of high-end rental housing in the nabe should ensure a quick lease-up.
The two lowest floors of the building will become the Senegalese embassy and be retained as a commercial condo. The embassy is currently located at 4 West 125th Street, in West Harlem.
Avison’s mortgage pros searched for non-recourse funding for the unique project.
“The rate is slightly higher than your traditional financing from a bank, but in return we got non-recourse, which is what Doral Bank specializes in,” Mr. Eyzenberg said.
He declined to provide the rate of the 2-year loan, but a source with knowledge of Doral’s dealings said rates for loans such as this from the bank are usually between 6 and 6.5 percent, and that they generally cap the loan-to-cost ratio at about 65 percent.
No one answered the phone at Doral’s media relations desk.