Taconic JV taps Union Labor Life for $204m Big Apple multifamily construction loan

Taconic Partners and National Real Estate Advisors tapped Union Labor Life Insurance Company for a $204 million construction loan to finance the development of a planned 367,000-square-foot multifamily mixed-use development in New York’s Times Square.

The property at 312 West 43^rd Street will include 330 amenity-rich luxury residential units and more than 40,000 square feet of retail space. Arranging the financing was not without challenges, partly due to concerns around New York’s recovery from the covid-19 pandemic, said Andy Singer, principal and co-lead of advisory firm Avison Young’s Tri-State Debt & Equity Finance Group, which arranged the financing.

“The process was different because of the concerns we were all expressing about the future of New York,” Singer told Real Estate Capital USA. “There were those of us who had great faith in the beginning in New York, but there was still the question of ‘What will covid do to us all and do to the market?’ We were placing the loan right at the heart of that.”

One factor that gave comfort to prospective lenders was the experience and reputation New York-based Taconic has as a significant local developer. “Because of the sponsorship, there was great interest,” Singer said. “But another question was, ‘How do you do projections for rents for the residential and retail?’ We did have far more conversations with far more concerns raised than we’d normally have but we ended up with seven viable proposals for construction financing.”

Despite concerns about the recovery of the retail sector, Singer noted, prospective lenders were able to get comfortable with the loan because of the building’s location near Times Square, the theater district, Port Authority Bus Terminal and a confluence of existing apartment buildings. These factors meant there would be substantial foot traffic.

“You have a lot of apartment buildings without a lot of shopping,” Singer said, noting the retail component will have storefronts on 42^nd Street while the residential entrance will be on 43^rd Street. “We had to answer reasonable, rational questions about the property, but as time went on, it was certainly clear that things were getting better.”

With Union Labor Life getting the assignment for the loan, Singer noted there are several unions involved in the transaction. Taconic’s equity partner, National Real Estate Investors, is the union for the National Election Workers, while Taconic entered into a 99-year ground lease with the 1199SIEU Health Care Workers Union, which owns the 32,000-square-foot vacant lot on which the property is being built.

“You have three major union components that all wanted to see the building built on that location and that, combined with Taconic’s impeccable reputation, meant the reception from lenders was great,” Singer said. “Anytime you have a ground lease there are more complications, but it’s important to remember that this is today a ground lease that was created in the last couple of years and lenders are more concerned about some aspects of older ground leases, like rent re-sets. We were able to make sure the lenders knew this lease was secure.”

Along with Andy Singer, Scott Singer, Alan Schwartz and Kathleen McSharry spearheaded the lending assignment for the 33-story building.