Manhattan Office-to-Residential Project Lands $867M Financing
The package is a record for the conversion of a single office building.
The year is ending on a historic note for the growing office-to-residential conversion trend. InterVest Capital Partners and MetroLoft have secured $867 million in financing to transform 111 Wall Street, a vacant office tower in Manhattan’s Financial District, into a 30-story luxury residential rental community. The package, arranged by Walker & Dunlop, marks the largest ever single-building office-to-residential conversion loan in the U.S.
The firm’s Capital Markets Institutional Advisory Practice arranged a $778.6 million construction loan from Apollo Global Management, J.P. Morgan Chase & Co. and TYKO Capital. Walker & Dunlop Senior Managing Directors Dustin Stolly, Aaron Appel, Adam Schwartz, Keith Kurland, Jonathan Schwartz, Managing Director Sean Reimer and Senior Director Sean Bastian arranged the financing.
Walker & Dunlop also advised on the expansion of an existing $88.4 million C-PACE loan from Petros PACE Finance in 2021 that remained in the capitalization, bringing the total financing package to $867 million. At that time, it was the largest single C-PACE transaction closed on the U.S. and was to be used to finance upgrades and renovations at the office building including HVAC air conditioning and MEP systems and redundant power systems.
The previous financing record was also held by MetroLoft, which secured $720 million in construction financing from Madison Realty Capital in May for another major Manhattan project. MetroLoft and partner David Werner Real Estate Investments are converting 235 W. 42nd St., the former headquarters of Pfizer Inc., and a connected property at 219 E. 42nd St. into approximately 1,600 apartments. It will be the nation’s biggest conversion project upon completion.
Citigroup, which leased 900,000 square feet, left the 24-story, 59-year-old 111 Wall Street in late 2019. InterVest, formerly known as Wafra Capital Partners, acquired the leasehold for the 1.2 million-square-foot building with Nightingale Properties from Zurich Insurance for $175 million in January 2020. The joint venture gained full control of the property in summer 2021, when it bought the fee interest for $220 million from Omnispective Management, according to the Commercial Observer.
Stolly said in a prepared statement the project underscores continued investor confidence in large-scale adaptive reuse developments in core urban markets like New York as developers and global capital providers increasingly turn to residential conversions at office properties that are seeing post-pandemic vacancies.
Inside 111 Wall Street’s conversion
The redevelopment, which will include a five-story overbuild and a fully redesigned lobby, will feature about 1,568 units across more than 899,000 rentable square feet and more than 100,000 square feet of luxury amenities. The project will also include 7,000 square feet of ground-floor retail. About 25 percent of the apartments will be designated as affordable housing for residents earning an average of 80 percent of Area Median Income, qualifying the project for New York City’s Affordable Housing Conversion Program.
The developers are amping up the amenity program to rival luxury condominium offerings and position 111 Wall Street as a premier downtown Manhattan rental property. Amenities will include a wellness and recreation suite with a spa, golf simulator, bowling alley and social lounges; full-service, state-of-the-art fitness center, café and coworking spaces; and a rooftop with a climate-controlled padel court and regulation basketball court. The rooftop space will also feature a pool, jogging track, outdoor fitness area and views of the waterfront and Manhattan and Brooklyn skylines. Additional amenities will include a 24/7 lobby, concierge services, tenant storage and mix of lifestyle spaces.
111 Wall Street has a waterfront location along South Street and the East River. The property has immediate access to mass transit, including ferries, water taxis and several subway lines. Residents will be close to lifestyle amenities including Brookfield Place, South Street Seaport, Westfield World Trade Center Mall and the Tin Building by Jean-Georges.
In addition to InterVest and MetroLoft, the development team includes Collaborative Construction Management, Gensler as architect of record and Corcoran New Development as marketing and leasing agent.
