Paramount Advisory LLC, a commercial real estate capital markets investment banking firm with offices in New York and in Florida, has successfully restructured and closed a distressed leasehold construction mezzanine note (“Note”) held by major Korean financial institution (“Client”) in connection with the development of a 61,000 SF class A boutique office building at One Saint Marks Place in the Lower East Side of Manhattan, New York. Paramount was retained by the Client shortly before the prospective termination of the leasehold, which would have resulted in a 100% loss for the Client. Paramount immediately devised a potential restructuring plan that involved cooperation from the Lessor, Developer, Client, Client’s special servicer, new senior lender and existing senior lender. The final Paramount proposal, which consisted of the Developer curing the leasehold default, obtaining a new $70MM senior construction loan from Parkview Financial to partially pay-off the Note, discounting the Note and converting a portion of the Note to common equity, was ultimately accepted by both the Developer and Client. Paramount is also participating as principal equity investor. With fresh capital injected and the default concerns remedied, One Saint Marks is once again on its way to becoming a successful office development.
DH Kang, Managing Partner for Paramount, commented, “One Saint Marks rescue project was exceptionally challenging in terms of managing expectations of the Korea-side investors. There were multiple retail clients who made indirect investments into the mezzanine fund managed by our Client. Although some concessions were made, we believe we delivered our Client a positive outcome as opposed to a total loss. We’re happy that we were able to pull this off and be part of an exciting development project.”
David Jankowitz, Principal for Paramount, commented, “We are very proud that we were able to develop and present a well laid-out plan within hours of learning about the situation from our Client. This allowed the project to avoid default while we negotiated and implemented this plan that ultimately satisfied all parties. Korean institutional investors often find themselves in a problematic situation where a potential solution exists but they cannot execute due to their lack of manpower in the United States. We hope that One Saint Marks’ closing provides ample evidence to our Korean counterparts that they can always rely on Paramount to solve a potential complex default situation.”
Mark Seigel, Managing Partner at Real Estate Equities Corporation, the developer for One Saint Marks Place, commented, “We are looking forward to delivering this special asset to the marketplace. Upon completion in mid-2024, this best-in-class boutique office building will benefit from its unique Morris Adjmi design, extensive amenities, and ample outdoor space, as well as its central Midtown South location.”