(Read more on the debt and equity markets and the multifamily market .)
RIVERDALE, NY-NorthMarq Capital Inc., headquartered in Minneapolis, arranged financing for a $37.2-million institutional equity joint venture to acquire a portfolio of 261 unsold co-op units here. NorthMarq worked side-by-side with the client and institutional investor, and demonstrated the advantages of this niche market and the benefit of purchasing the units all equity, according to Greg Nalbandian, VP of NorthMarq Capital's Northern New Jersey regional office.
"If funded by traditional debt, the units, which operated at breakeven, would have required a substantial interest reserve," says Nalbandian. "NorthMarq created an institutional equity joint venture to mitigate the interest reserve structure." A source close to the deal could not give further information due to confidentiality reasons.
Nalbandian adds that "in underwriting a strong turnover of units early in the investment period, and the ability to sell them at a substantial profit, NorthMarq structured an attractive promote for its client despite the inability to leverage the venture's return."
NorthMarq also arranged financing for a $17-million institutional equity joint venture to purchase a portfolio of 52 unsold co-op units located in New York City. Nalbandian says the portfolio's owner wanted to retain the units for future sale while his institutional partner preferred to cash out of the investment.
"We needed to find our client a new partner who not only understood the necessity of buying the portfolio as all equity in order to avoid the interest reserve structure, but also would be comfortable with the high per-square-foot unit values," Nalbandian says. NorthMarq created a second deal between the joint venture and was able to identify a financial partner who recognized the unique opportunities inherent in the real estate.
"The building's competitive advantage as the premier asset in its market sold the deal as a strong business opportunity, and the client was able to maximize his investment return," Nalbandian notes.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
