Madison Realty Capital backs Brooklyn portfolio buy

The real estate debt and equity investor has supported the deal with a first mortgage on the former hospital property portfolio.

Madison Realty Capital (MRC) has provided a $107 million first lien credit line to Fortis Property Group for the acquisition of the former Long Island College Hospital (LICH) site in the Cobble Hill neighbourhood of Brooklyn.

The loan backs 357,000 sq ft of former LICH retail, medical office, townhouses and development sites.

Fortis plans to redevelop the former hospital campus into a mixed-use project and paid the State University of New York $240 million last week in the first of two phases through which the firm will acquire the site.

The developer may build as many as four 40-story residential towers comprised of 820 units, about 223,000 sq ft of which would be deemed affordable housing, according to reports. New York University's New York Langone Medical Center will also build and maintain a new medical facility at the site.

“Cobble Hill is one of Brooklyn's most desirable neighborhoods, and yet properties rarely trade and very few are developed given zoning and landmark restrictions,” said Josh Zegen, co-founder and managing principal at MRC. “These properties are unique in offering as-of-right development potential and have no landmark restrictions, so this deal is particularly exciting for us.”

The developer agreed to build the towers near the Brooklyn-Queens Expressway after facing pushback from residents who were opposed to a project of that scale taking shape in the heart of the area.

The existing properties are located at 91-95 Pacific Street, 350-352 Hicks Street, 349 Henry Street, 112 Pacific Street, 82 and 84 Amity Street, 124-134 Atlantic Avenue, 113 Congress Street, 336 Flatbush Avenue, and 184 Sterling Place.

So far in 2015, MRC has closed 23 debt investments totalling $465 million and is on track for the completion of more than $1 billion of debt and equity transactions this year.