Israeli institutions will provide funding for the construction of a residential tower on the site of the former headquarters of the fashion giant Gucci, on Fifth Avenue in Manhattan. The Northwind Group, founded by the Israeli Ran Eliasaf, will provide the tower’s developers with half a billion shekels in credit, after it recently formed a group of investors that includes three institutional entities from Israel: Investment houses Best Dash andYellin Lapidot And the insurance company Menorah Insurers. This is what Globes has learned.
The exact interest rate on the loan is unknown, but in projects of this type it is usually a variable interest rate with high single-digit rates. So the loan is expected to start at an interest rate of about 8%, and with the rise in interest rates in the coming year may climb even beyond 11%.
The loan will be secured through the Northwind debt fund, and it will be secured through its first-degree mortgage on the new tower. This is a tower that will be managed under the “Mandarin Oriental Residence” brand, on Fifth Avenue and 54th Street in Manhattan. The project will offer 69 apartments for sale, starting at $ 2.5 million, with the expensive apartments reaching $ 15 million.
Financing rate of less than 50%
The residential project is being set up by a partnership between real estate developer Michael Shavu, Deutsche Finance America and German institutional investors, including a pension fund that manages about 100 billion euros, as well as a large public insurance company. The total cost of the project is expected to be about $ 350 million. That the loan reflects a financing rate of less than 50% of the total project cost.
The converted property was formerly used as an office building where Gucci’s historic headquarters were located. In 2018, the office part of the property was purchased for $ 135 million, and the buyers began work to convert the office building into a residential project. The commercial part is still used today as the flagship store of the fashion company COACH. On the day the loan was granted, the completion rate of the project was over 70%, and its construction is expected to be completed during the coming year.
The loan was initiated by a real estate debt fund, the third in number managed by the Northwind Group. The fund focuses on providing real estate-backed loans, primarily in New York and major US cities, with an emphasis on providing first-class loans for residential and rental properties. The Northwind Group currently manages approximately $ 850 million in U.S. debt strategies.
“A deal we feel comfortable with”
The deal is made despite a climbing interest rate environment, and according to Northwind’s managing partner and founder, Ran Eliassaf, “this is indeed a time to be very careful in making the deals. In this case, the building is almost complete, with equity in the project close to $ 180 million. “Addicted apartments. When we weigh all the parameters together, it’s a deal we feel comfortable with.”
How are sales progressing?
Eliasaf: “Last year was a record year for demand for apartments in Manhattan, with a record of 30 years. In the last two months, with the Fed raising interest rates, we have initially seen people rush to lock in mortgages because they fear interest rates will rise. I estimate that the cooling effect of the interest rate hikes will begin very soon. “
Ran Eliasaf, Founder and Managing Partner, Northwind / Photo: Noam Hod
Northwind Group is a US real estate investment company founded in 2008 by Ran Eliassaf and managed by his partners Tal Michalson and Jonathan Slasher. To date, the group has executed transactions totaling $ 3 billion, with the special debt fund it established for financing Projects provided $ 850 million in credit. The Northwind offices are located in New York and the state of Ohio.