Moinian ramps up lending with over $200M in NY, SoFla deals

Moinian ramps up lending with over $200M in NY, SoFla deals

Thursday, January 4, 2018

Joseph Moinian and Moinian Group properties (Credit: Moinian Group)

From TRD New York: Joseph Moinian’s Moinian Group is building up its lending operation with four new financing deals for projects in Brooklyn, Harlem and Miami totaling $216.3 million, according to documents filed on the Tel Aviv Stock Exchange on Wednesday. That puts Moinian’s total lending activity at $513 million, of which $84 million is in mezzanine lending.

Moinian, which has about $2 billion in real estate assets, initially got into the lending game in 2015 with a $65 million loan to David Marx’s Marx Development Group for a Hudson Yards hotel. In 2016, the company launched a dedicated investment platform, offering senior loans above $15 million, and mezzanine loans above $10 million. Since 2015, the company has provided a mix of equity, senior and mezzanine debt totaling $550 million across nine deals, according to TASE documents.

Of the new deals, three loans totaling $116 million have already closed, while the fourth and largest, a $95.5 million loan to Michael Shah’s Delshah Capital is still in final negotiations.

For the Delshah deal, Moinian will provide both senior and mezzanine loans to finance a 180-unit project in Downtown Brooklyn. The $95.5 million will be split into a $61 million senior loan carrying a floating interest rate of Libor plus 6.5 percent, and a $34.5 million mezzanine loan with a floating interest rate of Libor plus 11 percent, according to the terms. Moinian intends to sell the senior tranche to a bank, while holding the mezz piece.

Shah is partnering with John Carson’s OTL Enterprises to build a 20-story building at 22 Chapel Street, replacing a drug treatment facility with a 180 luxury rental units, 30 percent of which will be affordable in order to be 421a compliant.

Also in Brooklyn, Moinian will provide developers Joseph Brunner and Abe Mandel with a $60 million debt and equity package for two residential projects. Moinain will pay $7 million for a 35 percent stake in the projects, and provide up to $53 million in financing, of which the borrowers have so far drawn $12.5 million. The two-year loan will carry a 7.5 percent interest rate, with the option to extend for six months.

The first of the two developments is a planned 157,000-square-foot building at 343 Ralph Avenue in Stuyvesant Heights, with 155 apartments, 20 percent of which will be affordable. The second is a two-building project at 1428 Fulton Street with 123 apartments. Brunner and Mandel’s Bruman Realty bought the three-lot Fulton Street site for $11 million in 2014.

A third deal, with Carthage Real Estate Advisors, will provide $24 million in loans to fund the group’s recent acquisition of a Harlem property from the Abyssinian Development Corporation. In December, Carthage finally closed on the $28.7 million purchase following a legal feud with the seller. Plans for the site, at the Ennis Francis Houses at 2070 Adam Clayton Powell Jr. Boulevard, include 306,000 square feet of residential space and 31,000 square feet for a community facility.

The loan carries an 8.5 interest rate and will mature in 12 months, with two options to extend for six months.

The fourth loan will take Moinian to Miami, where the company will finance the redevelopment of the Greystone Hotel. Moinian provided $36.8 million in loans to Trans Inn Management, B Group and VOS Hospitality for the redevelopment of the historic hotel at 1920 Collins Avenue, and the neighboring Santa Barbara Hotel at 230 20th Street. VOS plans to combine the two properties into a 56,000-square-foot hotel with 92 rooms.

The loan will be split into a $20 million senior loan and a $16.8 million mezzanine loan, which carries a floating interest-rate of Libor plus 10 percent. The terms leave Moinian the option of buying a 23.7 percent stake for $5.7 million after January 2019.

In a presentation to bondholders, Moinian describes its financing activity as “an integral part of our holistic investment approach,” and lists the advantages of debt over equity, which include increased liquidity and lower risk. Another advantage, according to the presentation, is that the “ability to provide flexible financing gives [Moinian] a clear advantage over competitors and access to JV transactions under favorable conditions.”

Moinian also announced plans to raise up to $150 million in a new bond offering in Tel Aviv, the company’s first issuance since 2015, when it first entered that market. It wasn’t immediately clear whether the proceeds from the bond issuance will be used to finance the developer’s lending activity. A Moinian spokesperson was not available for comment.

A list of the projects Moinian has lended on, according to Tel Aviv documents:

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Source: The Real Deal