Dees Stribling, Contributing Editor
New York–The Lore and the Gateway, two condominium projects in Manhattan’s Harlem neighborhood that had been stalled because of problems with their financing, have been restructured and recapitalized, according to William Procida Inc. (WPI), which structured the deal renewals for Gaetano Development Corp., the property’s developer. Specifically, the projects were put on hold by the collapse of Washington Mutual.
The Lore is a 35-unit building on West 112th St. and was 90 percent complete, with 60 percent of its units sold, when construction stopped. Late last year, JPMorgan Chase, which succeeded WaMu in holding the note for the property, agreed to increase and extend the loan. Now construction is complete and the sales effort for the remaining units is under way.
The Gateway, a 54-unit project on Frederick Douglass Blvd., wasn’t as far along as the Lore when WaMu’s problems halted its construction, and faced a more complicated set of issues in getting back on track, explains WPI president Billy Procida. When JPMorgan Chase ordered the construction stopped, the building was just an eight-story steel frame.
WPI persuaded Chase to continue funding the enclosure and weatherization work so the project would not be damaged. Simultaneously, the company found a buyer for the loan who would fund completion. In June, the new lender closed on the purchase and construction is now under way again. Sales will commence this fall, with a scheduled completion in early 2011.
Procida tells MHN that this kind of “half-built” opportunity exists in a lot of places because of the fallout from the financial crisis, but that it takes a considerable amount of effort and expertise to revive them. “The country has half-builts in every city,” he says. “They are great opportunities if you know construction, restructuring and market repositioning. If you don’t, a half-built will eat you alive.”
He added that in the case of the two Harlem properties, “both are good projects that became collateral damage of the banking collapse. Construction projects require constant communication with your lender, and when a bank like WaMu shuts down, you’re left high and dry—a million people to talk to, no one to listen.”