Dealmaker: Knighthead Funding Provides $27M N.Y. Construction Loan
Knighthead Funding, Greenwich, Conn., provided a $27 million first mortgage construction loan for a seven-story mixed-use apartment building in Forest Hills, New York.
The developer, Paraag Sarva of PSRS Realty Group, Forest Hills, commenced construction shortly after the loan closed and expects a2018 delivery. The building, which replaces four existing commercial structures, will contain 46 apartments with ground-floor retail and underground parking.
“The underlying property has been owned by the same partnership since1984 and has significantly increased in value during those 32 years, but with the current High-Volatility Commercial Real Estate rules, conventional banks were not able to underwrite the ‘as-is’ value of the property as true equity contribution,” said Knighthead Principal Jonathan Daniel.
Daniel called the deal an example of how non-bank lenders are capitalizing on the increased regulatory constraints now facing banks.
The 36-month interest-only construction loan floats based on the prime rate.
The property sits half a block from Austin Street, a retail strip three blocks from the Forest Hills Long Island Railroad station and the 71st Street/Continental Avenue subway station.
“Forest Hills’ housing market is driven by Manhattan expatriates who come not just for the neighborhood, but also for the home prices coupled with the close proximity of the LIRR and the subway,” Daniel said. Forest Hills is 10 minutes from Flushing Meadows Park, the U.S. Open Tennis Center and the New York Mets’ Citi Field Stadium.
