The rental market in the New York MSA has become increasingly attractive for investors. With credit remaining tight, many would-be apartment buyers have become renters. The developers of The Gotham in Jersey City wanted to take advantage of trend.
Unfortunately, their funds were tied up in this magnificent 220-unit, 22-story high-rise building, the first luxury apartment since the 1950s to be located blocks from waterfront. In addition to panoramic views from the upper floors, The Gotham features 20,000 SF of commercial space and a 340-space, four-story parking garage.
With interest rates at historic lows, the principals—Ironstate Development and Panepinto Properties—sought a cash-out refinance of The Gotham to invest in other development opportunities. The challenge was securing a loan large enough to compensate for the substantial prepayment penalty on their existing loan. In addition, the property was subject to a payment in lieu of taxes (PILOT) agreement with Jersey City, which expired in 2020. This agreement would make underwriting especially complicated.
The principals turned to Beech Street. Having worked with the company before, they felt confident that Beech Street could find a way to complete the transaction successfully.