Capital One Supports Sprawling Affordable Housing Complex
Thanks to the investment that the ownership team of Taconic Investment Partners and Clarion Partners have made to modernize and revitalize Eastchester Heights apartments in the Bronx, occupancy rates at this sprawling affordable housing complex averaged 95.7 percent over the last six years. In order to refinance Eastchester Heights, given this Bronx community’s size, the ownership group needed a lender with a commitment to affordable housing and the capacity to underwrite and finance a large-scale community. It found such a partner in Capital One.
Eastchester Heights underscores the role that progressive, committed owners play in preserving New York’s stock of affordable housing. Originally designed in the 1930s by urban reformer Clarence Stein, Eastchester Heights was built around a series of interconnected courtyards, and included playgrounds, common rooms for workshops and clubs, and a nursery school. But by the mid-1990s, it had fallen on hard times.
When Taconic Investment Partners and Clarion Partners purchased the community in 2007, a turnaround was already underway, but the ownership group acted decisively to complete the turnaround and ensure that the change would be lasting. Thanks to a steady stream of improvements, the community is once again on track to recover its founding ideals.
Since they purchased Eastchester Heights, Taconic and Clarion have invested over $35 million, renovating nearly half of the apartments, replacing stairwells in many common hallways, opening laundry rooms, converting boilers to natural gas, and refurbishing playgrounds and basketball courts. The company recently concluded a two-year, 200,000-square-foot roof and parapet replacement project. These improvements have made a difference, raising average occupancy over the last six years to 95.7 percent.
When the time came to refinance their existing loan, Taconic and Clarion wanted to recoup their investment in the property, but also wanted a deal structure that would preserve options as they analyzed future plans for the community.
“Capital One understood our priorities, structured the loan accordingly, and streamlined the process,” said Charles Bendit, Co-Chief Executive Officer at Taconic.
In structuring a transaction for ownership, Capital One had a number of advantages. First of all, it was familiar with the asset, having provided a loan to a previous owner. Secondly, it had worked with Taconic before, providing a construction loan for a luxury Tribeca condominium. Adding to this breadth of experience, the bank also financed a number of properties for Clarion.
“We are always pleased to have the opportunity to build on existing relationships,” said Paul Kesicki, a Senior Vice President for Capital One’s Commercial Real Estate Group. “Since acquiring Eastchester Heights, Taconic and Clarion have done a tremendous job creating additional value through property improvements.”
Capital One was undaunted by the complexity of the community. Eastchester Heights is a huge complex, consisting of 118 four- and six-story buildings, housing a total of 1,416 apartments. It is one of the largest residential communities in greater New York City. In the end, the loan Kesicki and his team structured has an initial term of 30 months, with an option to extend in six-month increments for an additional 30 months.
The Eastchester Heights deal highlights not only Capital One’s commitment to tackling complex deals for clients, but also its commitment to affordable housing. At the time of the transaction, all of the units at Eastchester Heights were rent stabilized. “When we have an affordable property associated with borrowers of the caliber of Taconic and Clarion, we consider it a privilege to be part of the deal,” Kesicki said.
“We had a very short time-frame within which to secure financing for our acquisition. Capital One Multifamily assured us they could do it—and they delivered.”
Ronald Charvet, Senior Vice President for Asset Management at Lerner
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Capital One Multifamily Finance is distinguished by its ability to structure multifamily mortgages customized to the precise needs of its clients. We are a Fannie Mae DUS® lender, a Freddie Mac lender, and a FHA HUD lender. Plus, we offer balance sheet financing backed by the full strength of Capital One Commercial Banking. You can count on our team of multifamily mortgage makers to deliver apartment financing smoothly, quickly, and with certainty.