Naftali Group, Access Industries Close $385M Construction Loan

470 Kent Ave. Rendering courtesy of Naftali Group/Hayes Davidson

Naftali Group and Access Industries have secured $385 million in financing from two sources to build 470 Kent Ave., a mixed-use development with three residential towers that will be built in one of the last developable sites along the waterfront in Brooklyn, N.Y.’s, Williamsburg neighborhood.

The package consists of a $310 million senior mortgage loan from Bank OZK and $75 million mezzanine financing provided by Barings, the investment arm of MassMutual.

470 Kent will include three towers reaching as tall as 22 stories that are expected to have 561 units and total more than 645,000 square feet of residential space. Plans call for approximately 19,000 square feet of commercial space across all three buildings. The project, which is already under construction, is estimated for delivery in 2025.

The first phase of the development has already received city approvals and was granted the now-expired 421 tax break, which will result in 30 percent of the rental units being leased as affordable units. The tax incentive for developing affordable housing in New York City expired in June and the New York State Legislature failed to renew or replace it. It is not yet known whether the legislature will take up the issue in the 2023 legislative session.

Naftali Group acquired the parcel, a former lumber yard, overlooking the East River in May 2020 for $102.4 million. Coming in the midst of the COVID-19 pandemic, it was the largest land transaction between March 2020, when most of New York City was shut down, through late May. HSBC provided the financing for the acquisition.

The property is adjacent to the Brooklyn Navy Yard and located on the corner of Kent Avenue between South 11th Street and Division Avenue in South Williamsburg. 470 Kent is within walking distance to the water’s edge, which offers commuter services to and from Manhattan in less than 20 minutes from the South Williamsburg Ferry Terminal. It is also near several subway lines including the J, M and Z trains and is close to the Williamsburg Bridge, which also offers access to Manhattan.

Team effort

Miki Naftali, CEO & chairman of Naftali Group, said in a prepared statement the privately held development and investment firm was pleased to partner with Access Industries on the project and to have the confidence of the lenders.

Jonah Sonnenborn, head of real estate at Access Industries, said in prepared remarks the project will transform and bring new life to the Williamsburg waterfront. Access Industries, founded and led by Len Blavatnik, is a privately held investment company based in New York City that makes strategic investments in real estate and other industries.

A Walker & Dunlop team led by Aaron Appel and Keith Kurland arranged the financing package, according to The Real Deal.

Naftali Group properties

One of the most active developers in New York City, Naftali Group launched and sold out three luxury condo projects in Manhattan since 2020. In June 2021, Naftali Group received $102.7 million in construction financing for 1165 Madison Ave., a 13-story building with 12 luxury condominium residences and 3,750 square feet of ground-floor retail. Now known as The Bellemont at 1165 Madison, one of its penthouses sold for a record-breaking $65.5 million. Closings are expected to start in the second quarter of 2023. An earlier project, The Benson at 1045 Madison Avenue, which has 15 luxury condo residences, sold out.  200 East 83rd, a 500-foot residential tower being developed in partnership with The Rockefeller Group, is one of the top-selling residential projects in New York City and in Upper East Side history.