InterVest Capital Partners and developer MetroLoft have secured $867 million to transform 111 Wall St. in New York into 1,568 luxury apartments, marking one of the largest single-building office-to-residential conversion projects in the country.
InterVest, a global alternative investment manager, and MetroLoft plan to remake the vacant, 24-story tower in lower Manhattan into a 30-story residential property with more than 899,000 rentable square feet, according to a statement from Walker & Dunlop, the real estate finance firm that arranged the deal. The project aims to help address New York's housing shortage while repurposing obsolete office inventory.
Apollo Global Management, JPMorgan Chase and TYKO Capital provided a $778.6 million construction loan, the statement said. The arrangement also extended an existing $88.4 million Commercial Property Assessed Clean Energy, or C-PACE, loan from Petros, bringing total project financing to $867 million. That represents the largest office-to-residential conversion financing for a single building in U.S. history, according to Walker & Dunlop.
"This project captures the evolving demand for high-quality residential living in lower Manhattan," InterVest CEO Michael Gontar said in the statement. "Adaptive reuse projects like this are a hallmark of one of our investment strategies."
MetroLoft did not immediately respond to a request for comment from CoStar News.
The deal surpasses an office-to-residential loan for Pfizer's former headquarters, a deal previously reported to be the largest of its kind in New York. In that transaction, a joint venture between MetroLoft and David Werner Real Estate Investments, the team behind the conversion of 219 and 235 E. 42nd St., took in $720 million from real estate private equity firm Madison Realty Capital.
Construction has commenced at the Pfizer location. That project is expected to total 1.3 million square feet and house about 1,600 luxury rental apartments.
National conversions
The financings come as New York and other cities around the country, including Chicago and Washington, D.C., are exploring or have already initiated office-to-residential conversions to make adaptive reuse of outdated or excess office stock.
The deals also represent investor confidence in adaptive reuse projects as office vacancies remain elevated. The loans signal continued capital appetite for large-scale repositioning in core urban markets.
"With office vacancies still elevated post-pandemic, we are seeing developers and global capital providers increasingly turning to residential conversions as a practical path forward," Dustin Stolly, senior managing director at Walker & Dunlop, said in the statement.
Still, industry professionals have said that office-to-residential conversions can be challenging and costly due to several factors, including building layout, kitchen gas hookups and other infrastructure that may be required for an apartment.
InterVest and MetroLoft plan to add five stories to the 1968-built 111 Wall building and create luxury amenities spanning more than 100,000 square feet. The Financial District project includes a rooftop regulation basketball court, pool, golf simulator, bowling alley and spa. The property, when overhauled, is also set to feature 7,000 square feet of ground-floor retail space.
Roughly a quarter of the units will qualify as affordable housing for residents earning 80% of the area median income under New York's affordable housing conversion program, according to the release.
The property sits at South Street and the East River waterfront with views of the Brooklyn and Manhattan bridges. The location provides access to Brookfield Place, South Street Seaport and the World Trade Center complex.
For the record
Collaborative Construction Management will manage construction. Gensler designed the conversion. Corcoran New Development will oversee marketing and leasing. Dustin Stolly, Aaron Appel, Adam Schwartz, Keith Kurland, Jonathan Schwartz, Sean Reimer and Sean Bastian of Walker & Dunlop arranged the financing.