An Oceanfront Community Development Project

Project Summary:

Our client, Arverne by the Sea Development in Rockaway, Queens was seeking $11.5 million in financing for development of a retail transit plaza and construction of a new Stop and Shop Supermarket for the community of Arverne. The residential housing had been developed and funded by various banks for the developer.

Issues:

• In the current real estate market, obtaining financing for new construction for retail projects is nearly impossible as the majority of banks will not consider such projects even undertaken by strong borrowers.
• The client tried to arrange financing with bank lenders, but was unsuccessful, partially due to the fact that tenants had been secured for only 50% of the retail transit plaza, with opt out-clauses granted. 

Solution: 

• We secured special tax exempt bond allocation for the project from the NYC IDA in a competitive process using Recovery Zone Facility Bonds, available through a provision in the American Reinvestment and Recovery Act (ARRA).
• We arranged an $11.5 million variable rate bond financing, enhanced with a 3-year letter of credit from a highly-rated bank in New York, with an all-in rate of 2.40% which can be converted into a fixed rate at any time during the 30-year term.
• ThinkForward was able to convince the real estate appraiser to increase the value of the project by 20% by demonstrating that eligibility for low cost financing effectively increases the value of the property. The same appraiser had assigned a much lower value to the property using conventional bank financing.

Benefit:

• The Shop and Shop Supermarket project was financed and built in time to open on schedule.
• The borrower obtained lower cost financing due to ARRA.
• The project will create new jobs for the community.
• The City of New York was very pleased excited on the completion of the financing and the project.

Latest:

We are currently working with the client to finance the development of a YMCA for the Arverne community. In addition, we will be arranging New Market Tax Credit financing for the development of a charter school for the same community. ThinkForward has the capability to provide a wide range of financing solutions for the client’s diverse range of projects