HSBC Bank has provided $62m in financing for Brack Capital Real Estate’s (BCRE) citizenM New York Times Square boutique hotel at 218 West 50th Street in Manhattan’s Times Square neighborhood, Real Estate Capital has learned.
BCRE was understood to have developed the hotel free of debt at a time when ground-up financing was limited and unattractive, purchasing a parking garage at the site for $22.5m back in April 2010 and opening the hotel’s doors in April 2014.
Chief executive of BCRE, Issac Hera, declined to comment for this article, making the specific purpose of the loan unclear, but it is not uncommon for developers and property owners to take out a mortgage on one lightly encumbered property in order to go buy or build something else.
BCRE after all owns, has developed, or is in the process of developing, more than 20 properties in Manhattan, including the new James NY Hotel on Grand Street in SoHo, the Hilton Garden Inn Hotel in Midtown South, and an upcoming citizenM hotel in Nolita, in addition to various luxury apartment buildings.
“It is cheaper to borrow than to raise equity capital,” said one industry source, noting that a bank like HSBC might charge somewhere in the 4% range, whereas equity capital would come in at much steeper rates: anywhere between 7%-15%.
The HSBC loan has been consolidated with a $6m loan from Signature Bank (November 2013) into a $68m mortgage, according to city property records.
The 21-story, 230-property, between Broadway and Eighth Avenue on West 50th Street, was the first in the US under the citizenM name, known both for its hipness and affordability.
Designed by Concrete with architecture by Montroy Andersen DeMarco Architects, the limited-service hotel’s interior highlights a collection of contemporary art and photography from Andy Warhol, Daido Moriyama, David LaChapelle, Julian Opie, in addition to work by Jen Liu along its façade.