Ladder Capital Lends $45M on Bronx’s Bruckner Building Buy
A new Big Apple real estate partnership has grabbed a $44.8 million financing from Ladder Capital to fund its inaugural acquisition in the form of a Bronx office building, Commercial Observer can first report.
The buyer, ZG Capital, is using the debt to scoop up the Bruckner Building in the Bronx’s Mott Haven neighborhood in a $65 million acquisition from Savanna, according to Cushman & Wakefield (CWK)‘s debt advisory group, which represented ZG Capital in the acquisition. The Real Deal first reported that Savanna was offloading the property in October.
A C&W spokesman declined to comment on further details of the loan’s terms.
Savanna and its partner, Hornig Capital Partners, recently finished a $12 million renovation of the loft-style office building, at 2417 Third Avenue, just across the Harlem River from Manhattan’s East 132nd Street. The work added new elevators, an updated lobby and fresh windows to the building, where the tenants include a catering company, a semiconductor startup and a workforce-development firm.
“We’re extremely excited about this submarket,” said James Tamborlane, one of ZG Capital’s founders told CO. He cited Brookfield (BN) Property Partners‘ Bankside project along the Harlem River, and Lightstone‘s recent acquisitions of plots that could be developed into as much as 1.5 million square feet of residential space, as evidence of the neighborhood’s momentum. “There are restaurants opening on a daily basis. We compare it to some places in Brooklyn — the next Dumbo or the next Williamsburg,” Tamborlane added.
Gideon Gil, Alex Lapidus, Maya Steinberger and Adam Doneger of C&W found the loan on behalf of ZG Capital. C&W has also signed on to manage the building under ZG Capital’s ownership.
“The Mott Haven submarket of the South Bronx is experiencing a surge in commercial and residential demand,” Gil said in a statement. “Our client was strategic about the Bruckner Building’s location and its ability to compete long-term in this submarket. Lenders were excited about the combination of sponsorship, location and the upside in the submarket and positive cash flows.”
Tamborlane, a veteran of Murray Hill Properties, founded ZG Capital alongside Bobby Zar of Zar Group. “We think the Bruckner Building perfectly showcases our strategy and the type of assets we are looking to acquire,” Tamborlane said in a statement about the new platform’s strategy.
Savanna and Hornig paid $30.5 million for the converted manufacturing building in 2015 despite the need for urgent improvements to the site.
“There was no front door — there was a tiny door on the side street,” Thomas Farrell, a managing director at Savanna, told Commercial Observer on a tour of the improvements in early 2017. “We had a lot of problems to clean up when we took over the building, but it had great bones.”
Today, there’s a more dignified main entrance, fresh interior design accents, and nearly a thousand feet of lounge space on nearly all of the building’s eight floors.
A Ladder Capital executive did not immediately respond to an inquiry.