AFC arranges finance to keep 48 Wall St. as commercial.

AFC Realty Capital has arranged $64 million of financing for 48 Wall St. which will permit the new owners to keep the historic 73-year-old building in the heart of Manhattan's financial district as a commercial office facility.

The new financing reflects a decision earlier this year by 48 Wall, LLC to reverse its plan to convert the 34-story tower -- the former headquarters of the Bank of New York -- into 277 rental apartments, according to Arthur Fefferman, president of AFC, a Manhattan-based real estate investment banking and mortgage brokerage firm.

Rents for class "A" office space in the downtown Manhattan market increased by 25% from $35 to $43 per sf in the past 24 months, Mr. Fefferman said, and the occupancy rate has risen from 90% to 96% -- both historic highs. Accordingly, plans for the residential conversion were changed, he adds, and AFC was asked to formulate a new financial strategy designed to maintain the property for commercial use.

The funding, secured from a regional bank, will refinance acquisition financing, complete ongoing building improvements, and fund tenant alterations for the new owners, an investment group including principals of Swig Burris Equities and MacDonald & Cie.

Because the building was originally constructed for commercial use, renovations will require less work than would be necessary for a residential conversion, Fefferman points out. Additionally, maintaining the facility as offices increases rentable space in the building to 324,000 sf.

Included in an ongoing $70 million upgrade for the building are new fiber optics for broadband Internet access, new HVAC and elevator systems, a new cooling tower, energy-efficient thermopane windows, and granite and marble bathrooms. The original 1927 architectural detailing of the landmark building, including its distinctive limestone facade, copper-plated eagle cap, marble lobby, and grand mezzanine, are being restored.

Located at the corner of William St. -- only two blocks from Trinity Church, where Bank of New York founder Alexander Hamilton is buried -- 48 Wall St. is only the third structure on the site since the Dutch conveyed the property to the bank in 1796. 48 Wall, LLC is only the second owner of the building; after more than 200 years of occupying the property, the bank moved in 1998 to 1 Wall St. -- headquarters of Irving Trust after it acquired that financial institution.

The growing need for commercial space in the downtown financial district and tenant willingness to pay higher rents should ensure a quick lease-up for the new owners of 48 Wall St., Mr. Fefferman said.

The financing transaction for 48 Wall St. was handled by Mr. Fefferman and AFC managing directors Michael H. Sonnabend and Matthew McManus.