Greenwich, CT-based Starwood Property Trust and Starwood Capital Group announced the sale of a 25% stake in both the first mortgage and mezzanine loan on 701 Seventh Avenue in the Times Square area of Manhattan to Vornado Realty Trust. On October 16, 2012, Starwood Property Trust and Starwood Capital Group announced the co-origination of a $475 million first mortgage and mezzanine financing for the acquisition and redevelopment of a 10-story retail building located in Times Square to build Times Square Gateway Center, a 340,000-square-foot multi-use complex. $375 million was funded at closing and $100 million will be funded upon reaching certain milestones during the transformation of the property.
STWD, Starwood Distressed Opportunity Fund IX, and VNO have now funded $210.9 million, $70.3 million and $93.8 million, respectively, and each party will fund their pro rata share of any future fundings according to a GlobeSt.com report. The lenders intend to sell the first mortgage in the near term to increase their investment returns and retain the mezzanine loan. Following the completion of the sale, the existing lenders expect that the mezzanine loan will generate an IRR in excess of 14% before attributing value to the equity participation received in the transaction which could be material.
"The Times Square Gateway Center will greatly enhance the North end of Times Square," said Ike S. Franco, Co-Managing Partner of Infinity Urban Century, LLC, of the new development. "With the combined strength of Maefield Development, New Valley, and The Witkoff Group, this project has the potential to become one of the most innovative New York City developments in decades and to further cement the image of Times Square as the most vibrant global retail and entertainment district."
For more news and information visit Blumberg Capital Partners.
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