Alloy Secures $375M Construction Debt, $120M in Equity for Brooklyn Megaproject

One of the largest commercial real estate developments in Brooklyn just got the financing it needed to finish construction. 

Alloy Development and its equity partner the Vistria Group have secured $535 million in construction financing to build One Third Avenue, a 583-unit mixed-income housing and office tower that will complete the second phase of Alloy Block, a multistage, mixed-use development in Downtown Brooklyn that began construction six years ago. 

Kayne Anderson Real Estate is providing $375 million of debt, while Vistria Group provided $120 million of equity. The JLL Capital Markets team of Chris Peck, Nicco Lupo, and Peter Rotchford arranged the financing, according to a release. Alloy Development told CO the firm is contributing an additional of $40 million in equity financing. 

The investment marks Vistria Group’s first investment in new construction development, according to Margaret Anadu, the firm’s head of real estate. 

“One Third Ave represents exactly the type of transformative development our real estate strategy was designed to support: delivering meaningful affordable housing while redefining sustainable urban living and forging public-private partnerships that achieve better outcomes for communities than either sector could deliver alone,” she said in a statement. 

Lee Levy, senior managing director and head of real estate debt at Kayne Anderson Real Estate, described One Third Avenue as a development that brings “sustainability, design excellence and community impact,” into a single deal. 

One Third Avenue joins two other completed developments — 505 State Street, a 44-story office and residential tower that doubles as New York City’s first all-electric skyscraper, and 489 State Street, a pair of environmentally efficient public schools — to unify the vision of Alloy Block, a mixed-use project that began in 2019 and will eventually deliver 1,000 housing units, 200 permanently affordable units, 60,000 square feet of new office space and 30,000 square feet of retail space to Downtown Brooklyn. 

At 63 stories tall, One Third Avenue is expected to be the tallest passive house building in the world. As a passive house development, its energy use will replace natural gas with electricity and emit a low carbon footprint, just as 505 State Street and 489 State Street adhere to passive house standards.

The new building will deliver 153 affordable units and will include six floors and 60,000 square feet of office space. The development will also transform two adjacent, 19th-century buildings into 30,000 square feet of new retail space. 

Last December, Commercial Observer reported that Alloy Development had secured a $290 million recapitalization for 505 State Street. 

Alloy began construction on the project in 2019, with the demolition of an existing structure on the site. After some delays, Alloy formally began construction in July 2021 after receiving a $240 million construction loan from Goldman Sachs, Related Companies and Ares Management.

“Securing financing for One Third Ave marks a pivotal milestone not just for this project, but for what we believe is the future of sustainable urban development,” Alloy CEO Jared Della Valle said in a statement.

Brian Pascus can be reached at bpascus@commercialobserver.com.