Bank of China backs contentious UES condo conversion

Bank of China has placed an $85 million mortgage on a recently developed condo conversion project at 166 East 66th Street on Manhattan's Upper East Side, whose developers recently came under the scrutiny of the state’s Attorney General.

Bank of China has placed an $85 million mortgage on a recently redeveloped condo conversion at 165 East 66th Street on Manhattan’s Upper East Side, whose owners recently came under the scrutiny of the state’s Attorney General.

The financing package takes out a previous $135 million bridge loan from Blackstone Mortgage Trust made in January of 2014.

165_east_66th_street_building1The development company behind the condo conversion, Miami-based Crescent Heights, paid the California Public Employees’ Retirement System (CALPERS) and investment management company GID $230 million for the property in November of 2013.

CALPERS had acquired the 20-story property, then known as the Westminster and since re-branded by Crescent Heights as Hanley New York, for $154 million as part of a larger deal that included another residential property at 200 East 62nd Street.

When Crescent Heights moved forward with plans to convert its rentals into condos they found themselves the focus of a recently settled New York State lawsuit brought by New York State Attorney General Eric Schneiderman. The suit alleged that the developers of the 150-unit building improperly tried to force out rental tenants tied to 82 of 150 leases through early termination clauses in order to make way for the condo renovations.

The development company has agreed through the settlement to pay $1.5 million to New York City’s Affordable Housing – AG Settlement Fund, established in June 2014 to help finance affordable housing for low-income New Yorkers. 

The developer must also offer all remaining tenants new leases (extending to at least June 30, 2016) and ensure that they receive an exclusive right to purchase their unit; and market-rate senior and disabled tenants can now elect to become non-purchasing tenants, guaranteed annual lease renewals and no “unconscionable rent increases.”