NEW YORK CITY-A stalled Midtown development site that fell victim to the economic downturn is ramping up once again. RFR’s Aby Rosen and Michael Fuchs have recapitalized a loan for a construction project at 610 Lexington Ave. through RCG Longview, according to the New York Post.
A spokeswoman for RFR tells GlobeSt.com in an e-mail that the company bought back the note and is starting to redevelop the site as a hotel and residential condominium development, as previously planned. “Currently we are going to market to source an appropriate hotel operator,” she says, in a statement.
The parcel—which features 118,150 buildable square feet—was originally slated to become a Shangri-La Hotel designed by architect Norman Foster. But the 207-unit development hit a roadblock after the financial collapse and demise of Lehman Brothers.
Prior to bankruptcy, the loan for the redevelopment was originated by Lehman and was subsequently sold to Swedebank AB and ING Real Estate Finance in June 2009, according to Real Capital Analytics. At the time, ING took 80% of the $145 million-worth of debt, but shortly after, both lenders filed to foreclose on the project.
The Post says an RCG Longview team has now taken over a $66.3 million loan from ING and has reconstituted a mezzanine loan, leaving RFR owing $64.7 million. RFR also transferred the property to another entity, which is valued at approximately $78 million, sources said to the Post.
The revamp of the stalled project comes at a time when hotels and condominiums are beginning to regain its footing in Manhattan. Nearby, Extell Development Corp. received a $700 million loan to construct One57, a 90-story mixed-use development with 95 luxury units atop the Park Hyatt’s new 210-key hotel. Citywide, Manhattan added 90,000 hotel rooms at year's end, a 24% increase from its peak in 2006.
Daniel Lesser, president & CEO of LW Hospitality Advisors LLC, tells GlobeSt.com that the recap is a sign that New York remains fundamentally the strongest hotel market in the world, but at the same time, the market is "under-hoteled."
"There aren't enough hotel rooms on a long-term basis," he says. "But I emphasize long-term because there has been quite a bit of new supply coming on-line, and it tends to be smaller, limited service either branded or boutique type properties. From a long-term perspective, Manhattan is an island. They don't make more land and it's very hard to execute development in New York. It's complicated."
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