99c, Deutsche Bank Lend $61M for David Werner’s 5 Hanover Square Acquisition

A joint venture between David Werner Real Estate Investments and developer Sam Fisch Development has secured $61 million of acquisition financing for a Lower Manhattan office asset that’s slated for a potential residential conversion, Commercial Observer has learned.

Real estate investment firm 99c provided a $41 million acquisition and pre-development loan for 266,639 square feet of the upper floors of 5 Hanover Square. Deutsche Bank also supplied a $21 million acquisition loan for five lower floors in the building in a condominium unit occupied by the The Ideal School of Manhattan. 

Arrow Real Estate Advisors’ Morris Betesh, Morris Dabbah and Louis Halperin arranged the multilayered transitional financing package that closed July 2.

Werner was in contract to buy the 25-story building from CIM Group for between $50 million and $60 million in April, CO reported at the time. The final purchase price could not be immediately gleaned. 

Betesh, founder and managing partner of Arrow, said navigating two loans associated with different elements of the building provided unique challenges to close under the tight 45-day window. The school in the building has a long-term lease which enabled Deutsche Bank to provide financing for the portion of the property that is not transitional, Betesh said.  

“We took the rest of the collateral and got a $41 million loan on it which provides the capital to complete the acquisition, but also to fund some of the business plan associated with the rest of the office, which is currently mostly vacant and will go through a transition,” Betesh told CO. “It was a creative structure to have one lender provide permanent financing, one lender provide bridge financing and then identify the most efficient capital for both components of it.”

The 24-story building is just 41 percent occupied with roughly 144,366 square feet of vacant office space, including eight full floors, according to Arrow. CIM previously acquired the 330,000-square-foot building for $104 million from Savanna in 2013, CO reported at the time. 

Officials at 99c, Deutsche Bank, David Werner and Sam Fisch did not immediately return  requests for comment.

Andrew Coen can be reached at acoen@commercialobserver.com