By Gail Kalinoski, Contributing Editor
Plans for a hotel and luxury condo project on West 57th Street in Manhattan are moving forward now that a joint venture led by JDS Development Group and Property Markets Group has acquired Steinway Hall at 109-113 West 57th St. for $46.3 million. The acquisition of the landmarked building from Steinway Musical Instruments, Inc., is part of a $230 million financing deal for the Steinway property and adjacent lot where the skyscraper will be built.
Meridian Capital Group, a leading national commercial real estate finance and advisory firm, arranged the $230 million in financing for the one-year, interest-only loan that features a fixed-rate and two six-month extension options. As part of this transaction, JDS Development Group and its JV partners also recapitalized and consolidated their existing development parcel at 105-107 West 57th St., according to a news release from Meridian.
“The acquisition financing provided the sponsorship with the necessary capital to create a truly extraordinary development assemblage,” Meridian managing director Aaron Appel said in the release. Appel and fellow managing director Moshe Majeski originated and executed the financing.
“Meridian was able to vividly illustrate the sponsor’s vision for the property to the lender in a compelling way that allowed the loan to close in a one-week timeframe,” Appel added.
Steinway had announced several months ago its intention to sell its interest in the 247,000-square-foot, 16-story boutique office building that houses its flagship showroom. The deal allows Steinway to occupy the property rent-free through September 2014 with an option to extend for four more months at an agreed upon rent.
Michael Sweeney, Steinway CEO, said in a release from his company that the sale strengthened its balance sheet, allowed it to focus on its core musical instrument business and positioned it to “prepare for the creation of a 21st century Steinway Hall in Manhattan that serves the needs of today’s artists and customers just as the West 57th Street building did when it opened in 1925.”
The building, located between 6th and 7th avenues in the Columbus Circle submarket, was designated and registered as a historic and cultural New York landmark in 2001. Designed by Warren & Wetmore, the building’s main room is a two-story rotunda with a domed ceiling hand painted by Paul Arndt.
“Ultimately, JDS Development Group will restore Steinway Hall to its original grandeur and will construct a more than 900-foot tall tower next door,” Appel said in the release.
Published reports stated the JV was particularly interested in Steinway Hall for its air rights so that it could potentially build the proposed tower on the adjacent parcel higher. Details on the project were not made public by the developers but an 8-K form filed with the U.S. Securities and Exchange Commission by a new JV partner, AmBase Corp., stated that the JV planned to redevelop the property so “that an approximate combined 334,000 gross square foot luxury residential tower, hotel and retail project shall be built on the property.”
AmBase, a Greenwich, Conn., investment firm, stated in the 8-K form that on June 21 it had invested $56 million for a 59 percent stake in 111 West 57th Partners, L.L.C., a joint venture affiliated with Michael Stern of JDS Development Group and Kevin Maloney of Property Markets Group. AmBase noted that on June 28, it invested another $1.25 million in the JV for an additional indirect 1.3 percent interest in the venture.
The 8-K document also stated that the property was acquired from 57th Street Partners NY, L.L.C, (an entity affiliated with Starwood Capital Group Global), Steinway, Inc. and111 West 57th Street Associates, L.P. (an entity affiliated with Wexford Capital L.L.C.) under three separate purchase agreements for each component of the property.
“The aggregate purchase price for the property was $238,300,000 and the joint venture intends to purchase additional inclusionary zoning rights for a purchase price of $6,500,000,” according to the AmBase Corp. 8-K statement.
“The 57th Street corridor remains one of the most attractive locations for retail and residential development in the city. This is evidenced by the numerous development projects under way and the recent volume and velocity of property sales in the building,” Majeski said in the Meridian news release.
One57, the luxury condo tower under construction by Extell Development Co., is located down the street from Steinway Hall. At more than 1,000 feet tall, it will be the tallest residential structure in New York City when it is completed.
Meridian also helped JDS Development get financing to acquire a 730,426-square-foot development site along First Avenue in Manhattan’s Murray Hill neighborhood in March. Meridian negotiated $128 million in financing for the project that calls for 830 residential units to be built in a 37-story building and a 47-story building between E. 35th and E. 36th streets. JDS Development reportedly paid Sheldon Solow $172 million for the site.