Dealmaker: Mesa West Capital Originates $26M Mezzanine Loan for Office-to-Multifamily Conversion

(Photo courtesy of Mesa West Capital)

Mesa West Capital, New York, provided American Real Estate Partners, McLean, Va., with a $26.1 million mezzanine loan for the conversion of a 200,000-square-foot office building into a 199-unit multifamily community in Old Town Alexandria, Va.

The five-year interest-only mezzanine loan was originated by investment funds managed by Mesa West Capital. The loan is part of an overall debt package that provided 67.5% loan-to-cost financing with a $61.8 million first mortgage construction loan originated by Bank OZK, Little Rock, Ark.

Built in 1984, the seven-story 1101 King Street is located in Old Town Alexandria, a historic submarket eight miles south of Washington, D.C. American Real Estate Partners plans to reposition the former office building as City House Old Town. The community will offer seven floorplans ranging from 572-square-foot junior one-bedroom units to 1,394-square-foot three bedroom, two-and-a-half bathroom units.

“The transaction presented an opportunity to originate a moderate leverage mezzanine loan on a multifamily property located in the high barrier to entry market of Old Town Alexandria,” Mesa West Executive Director Matt Snyder said, Snyder led the Chicago and New York-based origination team along with Mesa West Vice President Brian Hahn and Associate Jonah Sacks. “This has created a huge supply/demand imbalance for renters who want to take advantage of the neighborhood’s historic charm, strong retail amenity base and easy commute to Washington, D.C. and the area’s other major employment hubs.”  

The financing was arranged by Joe Donato, Kevin Ridgway and Andrew Gaffney of Newmark.