HRC plays the white knight to condominium developer

Real Estate Weekly,  Nov 14, 2007  

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In a recent transaction that seems to be part of a growing trend, Hudson Realty Capital, LLC (HRC) has provided a $6 million mezzanine loan to aid in the completion of a residential condominium project already under construction in the city of Mount Vernon, in Westchester County, N.Y.

"We have completed several of these transactions, which we refer to as our 'White Knight Mezzanine Program.' For this type of deal, we come in further along in the construction process to rebalance the capital stack and provide funding toward completion of a project," explained Karim Demirdache, managing director of HRC, a real estate private equity firm headquartered in New York.

"Typically, this happens when the developer experiences problems due to permitting delays or redesigns, which lead to a rise in construction costs. Often the current lender is not interested in refinancing the original loan, and that is when HRC becomes involved."

According to Demirdache, "This is an increasing trend that we have seen over the past year and a half in the New York area, as the number of condominium projects has increased and some less experienced developers have entered the scene. It has been exacerbated by the recent credit crunch."

The Mount Vernon project, known as The Vista at Fleetwood, includes con struction of an eight-story condominium building on top of a three-story parking garage, located on approximately half an acre at the intersection of the Bronx River and Cross County Parkways in the Fleetwood section of the city.

The building will contain 71 one- and two-bedroom residential units, 92 indoor parking spaces and approximately 5,700 s/f of commercial space.

It will also feature a 900 s/f fitness center and self-storage units for building residents.

The project is easily accessible from New York City, Connecticut and New Jersey and is within two blocks of a light rail station on the Metro North line.

"We are working with a strong sponsor who is experienced in the market," said Demirdache. "There is limited new construction coming onto the for-sale housing market in this desirable geographic area, and the completed units are well-priced to produce positive results."

Hudson Realty Capital is a real estate private equity firm currently with $800 million of assets under management.

Since the formation of its initial two funds in 2002, the company has closed more than $2 billion in debt and equity transactions. Activities include originating, participating in, servicing, restructuring and/or acquiring high-yield, special situation debt and mezzanine loans.

COPYRIGHT 2007 Hagedorn Publication
COPYRIGHT 2008 Gale, Cengage Learning