SBO hits the Marc with $155m Moinian deal.

Richard Bassuk, President of The Singer and Bassuk Organization announced the closing of $155 million in permanent credit enhancement and mezzanine financing for The Moinian Group's newest residential development in Manhattan.

The highly sophisticated transaction was placed for the Marc, a 452,000 s/f luxury residential building located at 260 West 54th Street, which contains 393 apartments and is owned and developed by an affiliate of The Moinian Group.

The proceeds from this transaction were used to repay a $135 million construction loan provided by KeyBank National Association, which SBO had previously arranged for the project. The construction financing utilized a combination of tax-exempt and taxable low-floater bonds for this 80/20 project.

SBO initially negotiated with various Fannie DUS lenders and Freddie Mac seller servicers before selecting Wachovia Multifamily Capital, Inc. as the DUS lender to represent the Borrower with Fannie Mae. Dan Cunningham and Bill Rosenbauer of Wachovia worked with Fannie Mac and Mr. Bassuk on this transaction.

Said Mr. Bassuk, "Wachovia and Fannie Mae were extremely responsive and provided the proceeds requested by the Borrower on highly advantageous terms. Dan Cunningham and Bill Rosenbauer of Wachovia Multifamily Capital, as well as Fannie Mae, exhibited both ingenuity and professionalism in achieving the desired results."

He added, "The permanent credit enhancement structure for the Marc was highly sophisticated and involved three separate tranches of financing. Analyzing the permanent financing alternatives, we advised the Borrower to retain $89.5 million of tax-exempt bonds, to redeem the project's outstanding taxable bonds and to provide in their place a structured Fannie Mae variable rate financing in the amount of $55.5 million.

"The combination of tax-exempt financing and structured Fannie Mae financing totaling $145 million exceeded the original $135 million construction loan by $10 million. In addition, a third layer of financing was added in the form of mezzanine financing from Wachovia Bank, N.A. having a five year maturity with amortization beginning 12 months following closing. This enabled the Borrower to receive $20 million of loan proceeds in excess of the proceeds of the construction loan."

"This financing package enables us to develop the Marc on more advantageous terms and to make it the building we'd always envisioned as a New Yorker's dream," said Joseph Moinian, CEO of The Moinian Group.

The permanent financing utilized auction rate tax-exempt bonds issued by the New York State Housing Finance Agency ("HFA") under its 80/20 program, with such bonds credit enhanced by Wachovia Multifamily Capital, Inc. under Fannie Mac's permanent credit enhancement financing program. Mr. Bassuk said, "The use of auction rate low-floater bonds, rather than the more traditional variable rate low-floater bonds, enabled the Borrower to achieve greater proceeds at a lower interest rate. This is only the fifth time auction rate bonds have been successfully utilized to provide permanent financing for a large multi-family project."

Mr. Bassuk indicated this complex structure was required in light of the substantial increase in value of the project since construction, and The Moinian Group's desire to monetize the appreciation in project value in order to obtain $20 million of proceeds in excess of the initial construction financing.

The Ownership's sophistication and ability to accept the complexities involved in the structure made the transaction possible. Mr. Moinian said that "Mr. Bassuk has achieved for us the objectives we had originally outlined for the financing, and through the structure SBO devised, has provided us with additional benefits."