MaryAnne Gilmartin’s development firm struck a deal to redevelop a corner site on Eighth Avenue in Chelsea.
MAG Partners signed a long-term lease with a sprawling, multi-block affordable housing complex for a dilapidated retail building at 335 Eighth Avenue, The Real Deal has learned. The firm plans to redevelop the site into a mixed-income apartment building with a grocery store and community space. Construction is expected to start in 2022.
The seven-story project will qualify for the Affordable New York program, with 30 percent of the approximately 200 set aside as affordable.
The Penn South complex in Chelsea was facing a conundrum as its 60-year-old retail building on the northwest corner of West 26th Street and Eighth Avenue needed significant repairs that the low equity co-op could not afford.
At the same time, leases with current tenants — Gristedes, McDonald’s, a tennis center and other services — were set to expire, meaning the co-op was facing a substantial drop in income. As a result, its 2,820 apartments would be due for a $500 monthly increase in maintenance fees.
The board had hired Paul Travis of Washington Square Partners as its real estate advisor in 2008 and he provided several options. Earlier this year, the co-op’s 5,000 residents voted to create a 99-year lease on the property so the rent payments would replace the lost income.
“The top priority for the Board of Directors is to preserve the affordability of Penn South for current residents and future generations,” Ambur Nicosia, the board’s president, said in a statement. “We needed a solution that does not require our shareholders to pay major increases in monthly maintenance fees. The stores are supposed to subsidize the apartments, not the other way around.”
After interviewing and getting bids from seven developers who specialize in such projects, the board agreed to lease the site to the woman-owned MAG Partners.
“They want to build affordable housing and do the right thing,” Gilmartin, CEO of the firm, said of the co-op board. “They were concerned about the views [of current residents] and space around the new building.”
Her company is currently constructing a similar but larger project at 241 West 28th Street, on land owned by Edison Parking. “The [board was] watching from afar and saw how we designed the building,” Gilmartin said.
The architect of the West 28th Street building, Rick Cook of COOKFOX Architects, will also design the Penn South project with an eye on the red brick of the 10-co-op buildings and the historical character of Chelsea.
“Obviously, it’s an incredible perch,” said Gilmartin of the site and the possibility of a roof deck for the occupants. “It’s something we will study and also the placement of the building, and then go back to show it.”
During her tenure at Forest City Ratner, Gilmartin oversaw the development of the New York Times Building on West 41st Street, the Barclays Center in Brooklyn and the Frank Gehry-designed 8 Spruce Street residential tower in downtown Manhattan. She also recently helmed the real estate investment trust Mack-Cali through a transition period.
Gilmartin announced the launch of her firm in December 2019. In addition to the 28th Street project, MAG is the development partner on a 6-acre development in Long Island City.
MAG Partners Selected to Develop Residential Co-op in Chelsea
By: Andrew Coen
MaryAnne Gilmartin’s MAG Partners has been tapped to redevelop 335 Eighth Avenue into a mixed-income apartment building with ground-floor retail space, the developer announced Thursday.
Penn South, an affordable housing cooperative based in Manhattan’s Chelsea neighborhood, selected MAG Partners for the 200-unit development that will be built under New York state’s affordable housing program, with 30 percent of its units reserved for low- and middle-income residents.
MAG Partners will develop and operate the seven-story building under a long-term ground lease with Penn South. A grocery store and other retail stores are planned on the ground floor, with construction slated to commence in 2022.
The Real Deal first reported the selection of MAG Partners.
“It is an honor to partner with Penn South and join their long legacy of community-building in Chelsea,” Gilmartin said in a statement. “We are committed to building in a way that enhances this beautiful neighborhood and provides value to the co-op’s long-term sustainability.”
Paul Travis of Washington Square Partners provided real estate advisory services to the co-op. Susi Yu, principal and head of development, led the deal for the MAG Partners team.
MAG Partners chose Rick Cook and COOKFOX Architects to design the building with plans to bridge the historical character of Chelsea. The developer is also currently working with COOKFOX on the nearby 241 West 28th Street, a 480-unit apartment building slated to finish construction in late 2022.
Ambur Nicosia, president of the Penn South co-op board, said in a statement that the deal will replace a commercial building that required huge repairs and provide revenue “to preserve the affordability of Penn South. We needed a solution that does not require our shareholders to pay major increases in monthly maintenance fees. The stores are supposed to subsidize the apartments, not the other way around.”
MRC Provides $173M Construction Loan for MAG Partners’ West Chelsea Rental Project
By: Cathy Cunningham
A new rental tower is now fully set to rise in West Chelsea.
Madison Realty Capital (MRC) just closed a $173 million construction loan for the development of 241 West 28th Street, Commercial Observer has learned. A joint venture between MaryAnne Gilmartin’s MAG Partners, Atalaya, Safanad and Australian investor Qualitas is developing the 479-unit project.
MRC provided the developers with a three-year financing at a 65 percent loan-to-cost. Jeff Rosen, a managing director at MAG Partners, led the financing on behalf of the sponsorship. Maverick Capital’s Adi Chugh negotiated the debt.
“This, in some ways, is a bet on New York, but it’s also a recognition of the resilience of the industry in the face of the pandemic,” Gilmartin told CO today. “This project is one I’m particularly proud of, because it took so very much to get here. And while I’ve been involved in financings and closings that have been far more complex — from a real estate point of view — I can tell you that all of the externalities and the dynamics associated with the last six months have made this closing a real accomplishment. We are really appreciative of all the sponsorship, including Madison.”
In 2018, L&L MAG signed a 99-year ground lease for the West Chelsea site, with plans to build a 372,000-square-foot COOKFOX-designed property that included retail space on the ground floor. Now that the L&L MAG partnership has split, it’s MAG Partners who is leading the project and it marks MAG Partners’ first standalone deal.
When completed, 70 percent of 241 West 28th Street’s units will be market-rate and the rest will be designated affordable. The project also benefits from a 35-year tax abatement. With the construction financing now sealed, development will kick off next month, and the building is expected to be delivered in 2022.
“We’re very excited to have closed this $173 million loan at a relatively low loan-to-cost with such an esteemed sponsorship group,” Zegen said. “This marquee 479-unit multifamily rental building, located within a few blocks of Hudson Yards and other prominent tech tenant expansions on the West Side, will be one of the only new multifamily rental projects built in Manhattan in the next few years. We were pleased to fill a void which would customarily be financed by conventional banks, and provide our flexibility, certainty and conviction.”
The deal is one of the few significant construction loans to close during COVID, and the sponsorship had to navigate the new debt playing field when selecting a lender.
“One complexity was that the conventional lenders are just not showing up at the dance, they’re all frozen,” Gilmartin said. “The usual suspects for us weren’t available to commit, and didn’t believe they could go the distance with us because the future is so uncertain. So, there was a smaller group of prospective lenders. I love [MRC] because Josh and his team are in our business; not only are they lenders, but there are builders themselves. They know how to underwrite risk, and they understand value creation associated with development.
“And that’s a rare thing in a lender,” Gilmartin added. “So, partly, it’s their DNA that brought them in and I think their staying power had a lot to do with how they’re hardwired. They were the perfect lending option for us, given the state of the city, the uncertainty, and for them it was all about the sponsorship, because they —like us — believe that this is a moment in time and that New York is going to come out of this.”
The project is close to some buzzed-about projects, including Vornado’s redevelopment of the landmarked former post office at 421 Eighth Avenue. In August, Facebook inked a 730,000-square-foot deal for the entire office portion.
“West Chelsea was — pre-pandemic — one of the hottest locations in all of New York, and it’s a very difficult place to afford a multifamily building because land prices are extraordinarily high,” Gilmartin said. “If you were just doing a straight-up purchase of the dirt you’d never pencil out on a 70/30 [project]; it just would never make sense.”
Gilmartin said that Edison, which owns the land, did not want to part with its interest in the site, “so, we have here an opportunity to put online a beautiful, mid-block, 22-story asset, and it’s very difficult to imagine that anybody else is going to be able to do what we’re doing,” she said. “We’re building this project in the heart of the tech community and, even through the pandemic, Facebook, Apple, Google and Amazon have all doubled down on the city. We think this particular location is really the heart of where much of the city’s growth and prosperity will lie.”
The deal represents Safanad’s first multifamily project in New York City.
“This was a really unique opportunity for us to work with great partners and to make an investment in New York City residential but — more importantly — New York City in general,” Andrew Trickett, a partner at Safanad, told CO. “We looked at this project and its location, and this opportunity is a really great long-term bet on New York City. We’ve had a lot of headwinds flying around the marketplace today, but we have an enormous amount of faith in MaryAnne and her team’s ability to execute here.”
The rental tower isn’t Atalaya’s first foray into the Nomad market. In 2018, the investment fund provided $65 million in preferred equity as part of a $315 million construction financing for Flag Luxury Properties’ Ritz-Carlton hotel at 1185 Broadway.
For MRC’s part, it has been actively lending and investing through COVID-19. According to sources, the firm has raised more than $1 billion in capital since the beginning of the pandemic.
MRC’s ability to approach deals as a lender but with an owner’s perspective was an ideal fit for the 28th Street project, Chugh said.
“There’s an old saying that goes, ‘You cannot learn about roads from a road map. You can only learn about a road by traveling it,” he said. “And I think Josh is a perfect amalgamation of a lender who also is empathetic to the equity owner/ operator side of the business. When I am talking to Josh about a transaction, I’m talking to somebody who has a multi-dimensional understanding of the deal. He understands the deal from a finance perspective, and he understands the deal from a development perspective. He understands what is required for a developer to be successful, and then he creates a platform and a deal that gives them the tools to get there.”
As for what’s next for MAG Partners, Gilmartin has her hands full but is excited for the future. In July, she was appointed interim CEO of Mack-Cali, as reported by CO.
“One of the really big milestones for me and my team on this project is that I have spun off out of my partnership with David Levinson and Robert Lapidus, which was a two-year success,” Gilmartin said. “I’ve spun off into MAG partners, which I own 100 percent, and this project came with me along with my other projects. So what’s really exciting about this building is that it’s a hallmark of MAG Partners, which is a 100 percent woman owned, ground-up development company. With this talented group of people that I took from Forest City, I created L&L MAG and now have spun out into MAG Partners, and 28th Street represents the first project of many.”
‘She Build’: Creating an All-Women Real Estate Development Team
By: Lisa Prevost
Taya Cook of Urban Capital, left, and Sherry Larjani of Spotlight Development are leading an all-women team to develop a 200-unit condominium building in Toronto. Credit…Aaron Vincent Elkaim for The New York Times
As a highly successful woman in New York’s male-dominated development arena, MaryAnne Gilmartin has a “mini-obsession”: She wants to oversee a commercial real estate project in which every part of the process is headed by a woman.
Ms. Gilmartin, the founder of L&L MAG, a real estate development company, knows from experience how to run a real estate project. As the chief executive of Forest City Ratner Companies, she oversaw such prominent projects as the Barclays Center in Brooklyn and the Renzo Piano-designed New York Times building in Manhattan.
Now, she has set her sights on doing the same with an all-women team. Ms. Gilmartin calls it a “she build,” and she knows “exactly where to go to find the right woman for every single part of the deal,” she said.
Her biggest challenge is securing the capital — the idea does not get a lot of traction in a room full of male investors, she said. But she is working at it, believing that if she can make such a project happen in New York, it will serve as a beacon to other aspiring developers who are women.
“We outliers have to keep at it,” Ms. Gilmartin, 55, said.
That’s because, despite progress in many other professional realms, women remain severely underrepresented in real estate development and investment, particularly in senior roles
Women held just 4 percent of senior investment roles at major real estate firms, according to a widely circulated 2011 study, and their numbers have improved only “marginally” since, said the study’s author, Nori Gerardo Lietz, who is a senior lecturer at Harvard Business School and a longtime real estate investor.
Ms. Lietz reviewed the senior ranks of 82 major real estate investment firms for the study, as well as many more private equity and venture capital firms, and found that women were noticeably absent from the most highly paid, “touch the money” jobs.
Her study attributed the gap to a combination of factors, including institutional sexism and more mentoring attention being paid to men than to women.
Eight years later, “the larger firms are trying to open up the funnel and get women in,” she said. “But they’ve not done a good job at retaining them.”
Firms should try harder to keep female employees on track, Ms. Lietz said, perhaps with policies for new mothers that allow them to balance the 80-hour workweeks required during transactions with time off.
One of the firms in Ms. Lietz’s study was Stockbridge, a real estate investment management firm in San Francisco with nearly $15 billion in assets. At the time, women held 17 percent of the firm’s senior finance positions. Today, the percentage is closer to 30 across all of Stockbridge’s senior positions, including finance, according to Kristin Renaudin, the firm’s chief financial officer.
Ms. Renaudin, 42, said she saw a growing number of women involved in real estate investment — all of the main players working with her on a major real estate portfolio purchase earlier this year were women. But the pipeline of candidates for the deal-making jobs is still heavily male, she said.THE MORNING: Make sense of the day’s news and ideas. David Leonhardt and Times journalists guide you through what’s happening — and why it matters.Sign Up
“The transactional, investment side is the last to come around,” Ms. Renaudin said. That was partly because many women did not pursue those jobs, she said, either because they are put off by a difficult-to-shake stigma that deal-making is a male-oriented culture or, if they have families, because they are discouraged by the significant travel and often-unpredictable work schedule.
Family life is definitely a factor, said Melissa Burch, 43, the executive general manager for New York development at Lendlease, a multinational property and infrastructure firm.
“These roles are all consuming when the deal is hot,” she said. “You have to be ready to sprint when the opening is there, and that unpredictability can be unappealing.”
Ms. Renaudin said she had been fortunate to have had “no shortage of opportunities” at Stockbridge, but recognized that she was a rarity in the industry. In fact, throughout her 21-year career, she has not had one female mentor or role model, she said.
That lack of role models could also hinder women’s rise up the ladder, said Taya Cook, the director of development at Urban Capital, a condominium development firm in Toronto.
“There are women I look up to in the industry, but they haven’t acted as mentors or role models,” she said. “I’d like to provide that for the younger generation.”
Ms. Cook hopes to do that with her own version of a “she build.” She and Sherry Larjani, the managing partner at Spotlight Development, also in Toronto, are leading a handpicked, all-women team to develop a 200-unit condominium building called Reina (the Spanish word for queen) in the Etobicoke district of Toronto.
The idea came last year after Ms. Cook, 38, read a Toronto Life magazine article that highlighted the city’s leading condo developers. All 20 were men.
“Honestly, it’s insane,” she said. “When you step back and have a look, it’s probably one of the last industries that’s really just so unbalanced.”
Ms. Cook noted that the backing of Urban Capital, which is run by two men, had eased the path to financing. Without their successful history behind her, “I would expect the experience to be much more difficult,” she said. “Finance is definitely on par with construction and development as a boys’ club.”
The Reina project has garnered considerable publicity in the Toronto area, said Ms. Larjani, also 38. Like Ms. Cook, she hopes the publicity will draw more young women into development.
“The point is to show that these women are working in all these roles, and they are roles you can take on,” Ms. Larjani said.
Ms. Gilmartin said that she never felt intimidated or thwarted at the table by men, but that young women coming out of top business schools “looking at a landscape of males” could have trouble seeing a way to break through.
“There are just not enough examples for these women,” she said.
Ms. Burch said that women should feel confident that if they can just “get into the room,” even if it is filled with men, they will figure out how to use their talents to rise.
She spent the first 13 years of her career at Forest City Ratner, where, she said, she started out as a “human clicker,” running the digital portion of presentations that the company co-founder Bruce Ratner made to investors. Just sitting in on dozens of those presentations was instructive.
“I soaked in every one of those conversations,” Ms. Burch said. “How do you convince investors? How do you lay forth a vision and bring others along?”
Eventually, she jumped in and made some of those presentations herself, and later worked closely with Ms. Gilmartin. Now, she’s hiring women for her own team at Lendlease, including one who’s in charge of acquisitions.
“She’d been in development for 10 years and never had a female boss,” Ms. Burch said of the woman she hired. “She told me one of the big reasons she came here was to have that. It was important to her.”