(Bloomberg) -- JPMorgan Chase & Co. has agreed to provide Harry Macklowe with an $850 million loan to construct a luxury-condo tower at New York’s One Wall Street, enabling the developer to proceed with the conversion of a landmark office building even as the city’s high-end residential market slows.
The deal is a coup for Macklowe at a time when lenders are wary of funding new Manhattan projects. JPMorgan, which has expanded its construction-financing business over the past year, will recruit other lenders to participate in the funding, according to people with knowledge with the transaction, who asked not to be identified because terms are private.
A JPMorgan representative declined to comment. A spokeswoman for Macklowe Properties said Macklowe was unavailable.
Macklowe, 79, is extending a bet on New York’s luxury market after building 432 Park Ave., a 1,396-foot (426-meter) Midtown tower that helped usher in a condo boom when sales began in 2012. Developers are now cutting prices and rejiggering their blueprints after the building surge left a glut of high-end apartments. For luxury homes that have found buyers in 2017, the median asking price was the lowest in at least five years, according to data last month from luxury brokerage Olshan Realty Inc., which measures contracts for $4 million or more.
Macklowe, who still has apartments to sell at 432 Park, purchased One Wall Street in 2014. He was originally seeking more than $1 billion to fund the conversion of the building, the former Bank of New York Mellon Corp. headquarters at the corner of Wall Street and Broadway. Initially, the tower was planned as 65 percent rentals, but now it might not have any leased apartments, Macklowe told Bloomberg News in March.
JPMorgan has become a prominent player in the New York residential market as others pull back. Last year, the company was part of a consortium of lenders that gave Gary Barnett’s Extell Development Co. extra time to find additional funding for his Central Park Tower condo project, while also teaming with Oaktree Capital Group LLC to provide Ziel Feldman’s HFZ Capital Group with a $500 million mortgage linked to four projects throughout the city.
The bank also is leading a roughly $1.6 billion deal to fund New Jersey’s American Dream mega-mall, a 2.9 million-square-foot complex in the Meadowlands formerly known as Xanadu. Canadian company Triple Five Worldwide is the third developer to take a stab at creating a shopping and entertainment mecca on the former landfill site that sits off the New Jersey Turnpike.
JPMorgan’s construction-financing deals have come largely from its investment bank. Traders who had been selling commercial mortgage-backed securities have expanded to loans that are unsuitable for bonds, betting on riskier transactions that carry higher yields.
--With assistance from Hugh Son
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