TODAY’S DEALS: TIAA-CREF Buys Into Manhattan’s Tallest Rental

4 min read

TIAA-CREF becomes the 49 percent owner of 8 Spruce Street; The Dermot Co. and AFL-CIO break ground on Manhattan's Upper West Side; and Johnson Capital arranges a FHA 223(f) refinance loan at interest in the 2 percent range.

New York by Gehry – Pool

New York—New York by Gehry, aka 8 Spruce Street, aka the tallest occupied residential building in the western hemisphere, has a new part owner after a recapitalization that values the 76-story, 898-unit high rise at $1.05 billion. TIAA-CREF now holds a 49 percent equity stake on the residential portion of the building, with original partners Forest City and National Real Estate Advisors retaining 26 and 25 percent stakes, respectively. Prior to the recapitalization, Forest City and NREA owned 51 percent and 49 percent, respectively.

“We believe that high-quality, multifamily assets in cities with the strongest demographics such as New York can be powerful additions to our well-diversified real estate portfolios,” says Phil McAndrews, head of real estate transactions and joint ventures, TIAA-CREF. “The opportunity to invest in state-of-the-art, high-rise urban apartment complexes can be rare and we look forward to working with Forest City to maximize the value of this asset for our clients over the long term.”

“We’re thrilled to welcome TIAA-CREF into the ownership of this world-class property,” says David LaRue, Forest City president and chief executive officer. “This transaction, and the commitment of a partner of the stature of TIAA-CREF, is testament to the tremendous value created by the development of this unique property. In less than two years since opening, New York by Gehry at Eight Spruce Street has become world-renowned for its striking design, receiving international acclaim and major architecture awards, and has become a symbol for the resurgence of Lower Manhattan.”

New York by Gehry will be superseded as the tallest residential building in the western hemisphere upon the completion of One57. If that name sounds familiar, it is likely due to its crane collapse during Hurricane Sandy, which was widely covered by the media.

The Dermot Co., AFL-CIO break ground on Manhattan’s UWS

21 West End Avenue

New York—The Dermot Company and its partner AFL-CIO Building Investments Trust have announced the acquisition and groundbreaking of 21 West End Avenue, which is located at the southwest corner of West 61st Street and West End Avenue. The 43-story building will be LEED certified and have 616 rental apartments and over 30,000 square feet of amenity space.

“We’re very excited about bringing this special building to the Upper West Side,” says Stephen Benjamin, chief operating officer of The Dermot Company. “We believe that 21 West End Avenue will generate strong interest for renters on the Upper West Side, and the new public school will be a great benefit for the building residents and others in the neighborhood.”

The public school, which will be 112,440 square feet in size, is expected to open for the 2016 school year. It will cater to students from pre-K through eighth grade. The asset will also be built under New York State Housing Finance Agency’s 80/20 program, which will designate 127 units (20 percent) as low-income units. The 80/20 Program uses long-term, 34-year, tax-exempt bonds. In this case the offering is $275 million, which will be used to finance the construction and lease up. Bank of America and Capital One served as joint book runners and joint lead arrangers for the letter of credit providing credit enhancement for the bond issuance.

The impressive amenity package includes a digital waterfall in the lobby, a 60-foot swimming pool with a hot tub, a 21,000-square-foot fitness center, a yoga and dance room, private wine bar and lounge, a child’s play area, hobby room, and dog grooming area.

Completion is anticipated by June 2015.

Johnson Capital arranges FHA 223(f) refi loan in 2 percent plus interest

Indianapolis—Johnson Capital announced that Scott Graber, senior vice president in Johnson Capital’s Denver office, has arranged a $22.2 million refinance FHA Section 223(f) loan secured by a 324-unit apartment complex located in Indianapolis named Overlook at Valley Ridge.

The owners are a family business with several properties in the area. They originally purchased the property in 2006 and this is the second FHA loan that Graber has arranged for them.

The 35-year, non-recourse FHA insured loan was funded by Huntoon Hastings Inc., a wholly owned subsidiary of Johnson Capital. The new debt, which was used to refinance an existing FHA insured 223(f) loan, is fully amortizing and carries a fixed interest rate in the low 2 percent range.

Commenting on the transaction, Graber says, “The loan was processed by the Indianapolis FHA Program Center, which was able to get this large FHA loan closed within the 60-day target time frame we needed.”

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