Proceeds Will Be Used to Acquire Unique Large Portfolio of Family-Owned Properties, Consisting of 15 Buildings with 175,000 SF in Prime Locations and Fund Future Renovation Costs
NEW YORK, Sept. 22, 2015 /PRNewswire/ — Madison Realty Capital (MRC), an institutionally-backed real estate investment firm focused on real estate equity and debt investments in the middle markets, provided first and second mortgage financing totaling approximately $124 million for the acquisition and future renovation of a 15-building, 175,000 square foot portfolio of residential and mixed-use properties in the East Village. Josh Zegen, Co-Founder and Managing Principal of MRC, made the announcement.
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"This portfolio of properties in such prime locations in the East Village would be nearly impossible to replicate in today's market, particularly at an excellent basis like what was achieved here. In general you see single building sales or small portfolios, not big bulk sales like this one, so it's truly a one-of-a-kind opportunity," said Josh Zegen, Co-Founder and Managing Principal of MRC. "We're excited to offer a customized loan package to help the borrower enhance the value of the portfolio. In this case, we were able to provide a one-source capital solution by participating in various tranches of the capital stack, which enabled the borrower to complete the acquisition, and to proceed with his plan to renovate and reposition the portfolio. We believe the borrower has a great opportunity here, considering the portfolio has been undermanaged and offers a significant market-rate component."
The portfolio has an attractive mix of studio and one-bedroom units, and offers potential for significant value appreciation through the renovation and repositioning plan. The buildings are well located in a neighborhood that is increasingly popular with young professionals and students due to its outstanding retail, restaurants, nightlife, and proximity to NYU and all of New York's employment centers. MRC worked closely with the borrower to provide a flexible financing solution to facilitate the acquisition, a complex off-market deal with long-term family owners. Going forward, the borrower plans to update common areas of the buildings, renovate residential units to maximize square footage, and lease up vacancies.
"On the lending side of MRC's business, our focus is on funding complex, time-sensitive middle market transactions like this major portfolio deal. We are active in special situation real estate lending throughout Manhattan and the outer boroughs, so we're deeply familiar with all the neighborhoods and get up to speed quickly," Zegen added. "MRC has developed a vertically-integrated team with rapid deal assessment and underwriting capabilities that brought this deal to a swift and successful conclusion."
Including this transaction, MRC has closed 24 debt investments totaling $590 million so far in 2015, consisting of special situation loan origination opportunities and loan acquisition deals. The firm is on pace to complete more than $1 billion of debt and equity transaction combined in calendar year 2015.
About Madison Realty Capital (MRC)
MRC is a New York-based real estate investment firm that pursues real estate equity and debt investments in the middle market. Founded in 2004, MRC has invested in approximately $3.5 billion of transactions in the multifamily, retail, office, industrial and hotel sectors.
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