Home News Naftali, Blavatnik Score $385M Loan for Williamsburg Project

Naftali, Blavatnik Score $385M Loan for Williamsburg Project

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Miki Naftali, Len Blavatnik, 470 Kent Avenue, Naftali Group (via Naftali Group, Google Maps, Mark Neyman / Government Press Office/CC BY-SA 3.0/Wikimedia Commons)

Miki Naftali and Len Blavatnik have raised $385 million to finance the construction of a sprawling residential project on the Williamsburg waterfront.

Naftali Group and Blavatnik’s Access Industries secured a $310 million senior loan from Arkansas-based Bank OZK and $75 million in mezzanine financing from Barings, the investment arm of MassMutual. Two of the buildings will be rental apartments, and the third will be a condominium.

Walker & Dunlop's Keith Kurland (Walker & Dunlop)

Walker & Dunlop’s Keith Kurland (Walker & Dunlop)

The Walker & Dunlop team led by Aaron Appel and Keith Kurland arranged the transaction. That’s because some lenders are pulling back on commercial real estate, while high interest rates curb demand for financing.

Aaron Appel of Walker & Dunlop (Walker & Dunlop)

Aaron Appel of Walker & Dunlop (Walker & Dunlop)

Miki Naftali, CEO of Naftali Group, said: “Lenders are very cautious.”

The development is located near the Brooklyn Navy Yard in South Williamsburg between South 11th and Division Avenues. Participate in several upscale neighborhood residential projects on Kent Avenue with views of the East River and Manhattan skyline.

Naftali has signed a deal to purchase the site, a former sawmill owned by Abraham Rosenberg, for approximately $180 million. in early 2019The developer has closed part of the site May 2020 at about $100 million. Naftali said he expects to complete the rest of the assembly, known as Phase 2, in January.

The first phase of development has already been approved for the expired 421a tax relief, ensuring about 30% of rental units at affordable prices.

The project will be built on one of the last undeveloped waterfront parcels north of Brooklyn and is expected to be completed in 2025. Naftali Group, one of his most active condo development companies in the city, has launched three of his luxury condo developments since 2020, including The Benson at 1045. Madison Avenue and 200 East 83rd Street on the Upper East Side.

“We timed this cycle perfectly and frankly, the last two cycles as well,” said Naftali. “We basically have zero inventory to sell.”

But Naftali predicts a recession in the short term.

“It’s clear we’re headed for a recession,” he said.

In Naftali’s view, it could also be to the advantage of the project. By the time 470 Kent starts selling his condos in 2024, he said he expects the Federal Reserve to start cutting interest rates again. So the market will be stronger.

“By 2024, the rate change momentum will start to reverse,” Naftali said. “More and more buyers will be able to buy with confidence.”

On the other hand, the drag on new construction, partly due to rising interest rates, will reduce the supply of condos coming to market in the next few years and further increase demand, Naftali said.

depending on the bank refraining from lending to commercial real estate Bank OZK is one of the most active construction financiers in New York City and other major markets due to rising interest rates and economic uncertainty. In July, the bank $176 million loan To Domain Companies for a 360-unit retail and apartment development in Gowanus.

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