Rudin is moving forward with a significant recapitalization of its Midtown East property at 845 Third Avenue, according to a report by the Commercial Observer. The developer is close to securing $350 million in new funding that will support its plan to convert the existing office building into residential units.
The financing package includes a $250 million construction loan from BDT & MSD Partners. Newmark’s Jordan Roeschlaub and Nick Scribani negotiated this loan on behalf of Rudin. In addition, Quantum Pacific, led by Idan Ofer, has acquired a 75 percent equity stake in the project for $80 million, as first reported by PincusCo. The total recapitalization surpasses the $222 million initially sought by Rudin, according to an offering memorandum.
Newmark’s team of Adam Spies, Doug Harmon, and Josh King arranged the overall recapitalization deal. All parties involved declined to comment on the transaction when approached by the Observer.
Rudin submitted plans in September to convert the 21-story building into a 411-unit apartment complex. The development will also feature 9,100 square feet of ground-floor retail space and amenities including a party room, gym, spa, sauna, plunge pool, media rooms and coworking areas.
The cost of conversion is projected at approximately $41.7 million. The project is expected to utilize the 467m tax abatement program; under this program, 25 percent of the new units will be designated as affordable housing.
Construction is scheduled to begin in the first quarter after office tenants vacate the premises and is targeted for completion in the third quarter of 2027.
The idea for conversion has been considered for several years. As of early last year, more than 100,000 square feet in the building remained vacant without any leases signed for nearly two years. Rudin delayed moving forward until recent zoning changes under the City of Yes initiative made it feasible by allowing additional floors.
