December 26, 2023
The Real Deal

MAG adds major partner, snags $73M for Chelsea project

Bank OZK funds another deal for developer

MaryAnne Gilmartin’s firm secured a new partner for its apartment building in Chelsea, along with $73 million in construction financing.

MAG Partners and Safanad are partnering with MetLife Investment Management to build a 188-unit building at 335 Eighth Avenue.

The joint venture also closed on a $73 million loan from Bank OZK.

In January, MAG and Safanad inked a 99-year ground lease for the site, which is controlled by Penn South, a 10-building Mitchell-Lama housing cooperative.

The co-op’s board voted in 2021 to create a ground lease at 335 Eighth Avenue, as a way to generate income on the site. At the time, various leases on the site were ending in the 60-year-old retail building, for tenants including Gristedes, McDonald’s and a tennis center.

Demolition and construction began in the fall of this year, though foundation footings were in place for the project to qualify for the now-expired property tax break 421a. The project will include 188 apartments, 30 percent of which will be set aside as affordable. To ultimately qualify for the tax break, construction will need to be completed by June 2026, though the development team estimates the bulk of work will be done by late 2025. 

This latest closing follows another for MAG Partners last month. Bank OZK provided $95 million in construction financing for 300 East 50th Street, a 195-unit project in Turtle Bay.

“It is thrilling to end 2023 with a second residential closing and now nearly 400 units under construction in Manhattan,” Gilmartin said in a statement. 

Construction financing isn’t easy to come by for multifamily projects, especially those scrambling to meet the 421a completion deadline. Lenders have mandated that developers guarantee that construction is completed even earlier than 2026. Recognizing developers’ challenges, the Adams administration launched a task force this month to help projects meet the tax break’s deadline.

View Source