Madison Realty Capital provided a $38 million first mortgage bridge loan for a group of foreign investors’ acquisition of St. John’s Queens Hospital, the firm announced in a statement Monday.
The Queens, New York hospital was acquired by a network of foreign investors led by Steve Wu for approximately $55 million, Crain’s New York Business has reported. The deal includes equity backing from Chinese investors as well. The Madison Realty financing will be used to repurpose the hospital – closed since 2009 – as a mixed-use space, according to a statement.
“New York has seen multiple hospital closings over the past few years, raising the issue of what happens to these large, centrally-located buildings. Investors now understand the opportunity, and they’re looking to create value through adaptive reuse,” Madison Realty co-founder Josh Zegen said in a statement. “The twist is that where foreign funds used to flow primarily to investments in Manhattan and Brooklyn, here they went to development in Queens. Pricing in Manhattan and Brooklyn has reached the point where it makes sense to build in the prime locations of Queens, where transportation is excellent and population continues to grow.”
Zegen added that he expects to see investments of similar magnitude in Queens moving forward. He had not responded to a request for comment at press time.
Madison Realty closed its Sullivan Debt Fund on $350.4 million in September. That fund’s LP base includes sovereign wealth funds, public funds, corporate pensions, fund of funds, universities, unions and insurance companies, co-founder Adam Tantleff told Private Debt Investor at the time. The fund received commitments from the New York State Teachers’ Retirement System and the Texas Permanent School Fund, according to research and analytics provider PERE Connect.
Madison Realty specialises in the origination and acquisition of loans in the US. The firm has invested in more than 160 transactions since its inception in 2004, according to its website.