$452m finance package set for downtown project

Real Estate Weekly, Jan 4, 2006

The New York office of law firm Morrison & Foerster LLP represented Bank of America, as administrative agent and sole lead arranger, in connection with the $452 million financing for a new multi-building, mixed-use project being developed by Edward J. Minskoff Equities, Inc. in Lower Manhattan.

The complex financing arrangement utilized an unusual mix of conventional construction and bond financing, including bonds issued by the New York City Housing Development Corporation.

JP Morgan Chase Bank and Landesbank Hessen-Thuringen were the other lenders participating in the financing at initial closing. Mezzanine financing was provided by an affiliate of hedge fund Black Rock.

The project, known as The Warren Street Condominium (at 270 Greenwich Street), encompasses an entire city block adjacent to Battery Park City, just blocks from Ground Zero.

The financing includes a $320 million construction loan facility for creation of a 228-unit luxury condominium tower at the site. It also contains an $82 million loan facility for the construction of a 155,000-square-foot commercial project (including a 400-unit garage), and a $50 million letter of credit enhanced bond financing, supporting the construction of a "50/30/ 20" residential rental building consisting of 163 units for low, moderate and market-rate units.

The letters of credit issued by the banks in connection with the residential rental building back a Fannie Mae credit facility, which in turn secured bonds issued by the New York City Housing Development Corporation.

The transaction team was led by Morrison & Foerster partners Mark Edelstein and John McCarthy. Real estate attorneys and other professionals at the firm working on the deal included Christopher Delson, Gunilla Haac, Scott Kohanowski, Joshua Bloodworth, Alethea Jones, Jason Jones, Justine Martin, Angela Garcia and Jeanette Harris, all in the New York office.

The same group represented Bank of America and Bank of New York on the construction financing of the $1.3 billion One Bryant Park in midtown Manhattan currently under development by the Durst Organization. That deal, which closed in late 2004, was notable as the first New York commercial project financed through the sale of post-9/11 Liberty Bonds.

The Morrison & Foerster attorneys have previously partnered with the Dursts in the financing of the Conde Nast Building at Four Times Square, also working with the Bank of New York. "This was a complex, multi-tiered arrangement, combining several different financing types on components of a larger, singular project," said Mr. Edelstein, who chairs Morrison & Foerster's real estate finance practice. "I believe we broke new ground in the way we documented and integrated a New York City bond financing into a larger, mixed-used project."

Mr. Edelstein noted that plans for the site had gone through several incarnations since originally proposed in 2001, when development rights were first awarded to Minskoff Equities.

Minskoff was selected by the city to build the tower on a 90,565 s/f lot bound by Greenwich, Murray, and Warren Streets, on the urban-renewal site known as Site 5B. In addition to the residential units, the project will include retail space for a planned Whole Foods supermarket and Barnes & Noble bookstore.