Millbrook Provides Capital for Harlem Developer
A unique and challenging structure that taps into the power of revitalized real estate market to better serve the community
Written By John Pheasant
Frederick Douglass Blvd has been the heart of the Harlem renaissance for the greater part of a generation, since 2003 when the area was rezoned for larger residential buildings which yielded a greater population density. Seizing a new opportunity, a seasoned developer and long-term Equicap client, is developing a ground-up condominium on the hallowed grounds of a Harlem church. This is one of many revitalization projects that began with developers partnering with local churches to improve their community. While many houses of worship are warding off developers as they struggle to hold on to their buildings as congregations dwindle, or struggle to pay heating bills and keep the roof from leaking, others have taken a more business savvy approach, and taken advantage of developers’ interest and have entered into joint ventures in an ongoing effort to infuse money into the community. Following construction, the church will return, reoccupying an improved space, double its current square footage and with a replenished working capital reserve.
“Our client’s development consists of 9 condo units consisting of 6 one-bedroom, 2 three-bedroom and one ground floor commercial unit to be occupied by the church,” explained Daniel Hilpert, Managing Director at Equicap. He continued, “typical of a joint venture with a church, the developer had to get the members of the church on board then find a suitable replacement property to relocate their services during the long development and construction process.” This follows the trend of houses of worship returning to the ground floor unit post construction. Looking out for religious institutions in situations like this, where they are typically negotiating with experienced developers and a team of attorneys, are the offices of the New York State Attorney General, which must give each of these projects their stamp of approval, sometimes a very time-consuming process.
We have a long-standing working relationship with Equicap built on trust – we liked the deal from the beginning and jumped into it
Following the original deliberations, the developer came to Equicap to secure construction financing, which was obtained, and construction began. After some unexpected delays, redesigns and cost overruns, the Developer was in need of additional capital. The existing lender was prepared to increase the loan amount – being confident in the developer – but needed time to get it approved, but an increase of the original loan amount would have triggered a requirement to obtain Attorney General reapproval, so once again, the developer turned to Equicap for help. Equicap, knowing time was of the essence, approached a trusted source – Millbrook Realty Capital, a well-known bridge lender with a reputation of moving quickly in such circumstances. A phone call, a raft of e-mails, and a shared scotch later, the latter was unnecessary for the deal but just to catch up, and the deal was ready for Equicap’s closer, Sally Wang, and Millbrook’s Managing Director, Uanderson Benedetti, to seal the deal.
“We have a long-standing working relationship with Equicap built on trust – we liked the deal from the beginning and jumped into it,” said Uanderson Benedetti.
The team structured a 2-step transaction and executed. Millbrook bought the note and immediately funded a small balance under the original loan facility. Then they filed a subordinated position behind the borrower’s existing portfolio of mixed-use and apartment properties to provide the additional funds to complete the project and fund a small interest reserve. Fees were deferred to increase the upfront funding and maximize proceeds to the developer.
Millbrook Realty Capital was formed in 2009 by Charles and Marc Yassky, two brothers who have been engaged in real estate since the late 1977 & early 1981, respectively. They, along with Uanderson, follow each of their client’s deals closely, monitoring and assisting clients as needed. Their expertise has allowed clients to execute their business plans with little interference.
“Our close relationship with Millbrook allows us to move forward quickly, closing deals in less than a week in certain situations,” explained Daniel Hilpert, “we’re looking forward to a great 2020 with them.”
For more information on Millbrook Realty Capital, please contact Uanderson Benedetti @ (212) 223-1270 ext. 128 or e-mail him at uanderson@millbrookrealtycapital.com.
