David Werner and Nathan Berman have locked in $90M in financing that will allow the partnership to move forward on another office-to-residential conversion.
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The senior first-mortgage loan, provided by Northwind Group, will be used for the acquisition and predevelopment of 675 Third Ave., Bisnow can first report. The 32-story, Class-A office building is slated to become approximately 430 rental units.
David Werner Real Estate Investments and Metro Loft Management were first reported in January to be under contract to purchase the property from The Durst Organization for roughly $100M, though a deed has yet to be filed as of Sunday.
“675 Third Ave. is exceptionally well-suited for residential conversion due to its ideal location in Midtown East, excellent natural light and efficient floorplates,” Northwind founder and Managing Partner Ran Eliasaf said in a statement. “Given the city’s ongoing housing shortage and the supportive environment created by new legislative initiatives such as the City of Yes and updated affordable tax abatement programs, converting office space into residential units represents a significant opportunity.”
The building at 675 Third Ave. sits on the same block as the former Pfizer headquarters, which Werner and Metro Loft are also in the process of converting.
There, the metamorphosis of 219-235 E. 42nd St. is expected to generate 1,600 residential units and would be the largest adaptive reuse project in the city so far. For now, that title belongs to 25 Water St., where residents have begun moving into 1,320 luxury apartments.
The Pfizer building’s conversion is also being financed by Northwind. In August, the lender provided a $75M acquisition loan for 219 E. 42nd St. Then, in January, it supplied another $135M for the fee interest in the adjacent property at 235 E. 42nd St.
“We are pleased to announce yet another successful loan closing with Northwind Group, whom we have developed a great partnership with,” Werner said in a statement about 675 Third Ave. “Northwind worked quickly and efficiently to meet a quick closing timeline while adhering to the terms of our agreement and providing flexible structure. I am excited for what is to come and look forward to working with the Northwind team on future transactions.”
The loan was structured and originated by Northwind’s latest debt fund, which launched in January and closed on approximately $300M in deals in the first quarter. The fund targets projects in New York City along with other gateway markets.
“It is amazing to see how, between the three loans we have made, a full city block on 42nd Street between Third and Second Avenues is being converted from office to residential rental units,” Eliasaf said in a statement. “Northwind Group is proud to be on the forefront of financing these market-leading, trend-setting projects.”
Northwind is among a variety of private credit players that have benefited from banks slowing lending activity to reevaluate their books and shore up reserves. Last year, the firm originated $1.1B in loans.
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