Joseph Hoffman’s Bushburg landed a $320 million construction loan for one of the city’s biggest office-to-residential conversion projects.
Bridge City Capital and Deutsche Bank provided the financing for Bushburg’s partial conversion of the 1.2 million-square-foot building at 80 Pine Street, the lenders told The Real Deal.
Bushburg paid $160 million last year to buy the 40-story skyscraper from the Rudin family, which developed the property in 1960. The building is about half empty, and Bushburg has already started converting floors 2 through 17 into 713 rental apartments.
Because a portion of the building is dedicated to office and the other is a conversion, the project proved tricky for some lenders to get comfortable with, according to Arrow Real Estate Advisors’ Morris Betesh, who arranged the financing.
“There were some people who had concerns about that, but there’s plenty of projected cash flow exclusively from the residential portion that more than justifies the overall loan,” he said.
Construction started earlier this year, and the first phase of apartments is expected to come online in January.
The project is using the state’s 467-m tax incentive program, which provides a 35-year tax exemption in exchange for office converters setting aside 25 percent of a project’s units for renters earning an average of 80 percent of the area median income.
Bushburg vice president Avi Glikman said the project “will offer a one-of-a-kind luxury living experience, featuring a full-service amenity club and a design-forward environment infused with art and creative energy.”
The property at 80 Pine joins a growing list of office-to-residential conversion projects that have gotten underway as developers have been able to find outdated office buildings at attractive prices.
Nathan Berman’s MetroLoft Management is behind a number of large projects, including the conversion of the former Pfizer headquarters in Midtown — which, at 1,600 units, is the largest conversion in history.
Vanbarton Group also has projects underway, slated to deliver more than 2,200 units.
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