Thorofare Capital has funded a $4,237,000 bridge loan for the acquisition, renovation, and lease up of 599 Johnson Avenue in the Bushwick neighborhood of Brooklyn, New York. The property, located 4 blocks from the Jefferson Ave subway stop, consists of a 13,000 SF industrial building that is being converted to an entertainment, retail, and food & beverage mixed-use project. The total cost is approximately $6,730,935 and includes a two-phase repositioning strategy. As a condition of funding, the sponsor pre-leased 60% of the gross leasable area on a long-term lease prior to closing.

The non-recourse financing, provided by Thorofare, is subject to a construction completion guaranty and carries an initial term of 12 months with only six months of yield maintenance. The total loan advance is sized to a 10% debt yield on stabilized NOI or 65% of stabilized value. In addition to the CapEx, tenant improvement and leasing commission holdbacks, Thorofare also funded an interest reserve to cover debt service until the building is stabilized.

599 Johnson Avenue is in the heart of Bushwick, a sub-market of Brooklyn that has rapidly gentrified over the past decade with established neighborhoods such as Brooklyn Heights and Park Slope being joined by the likes of Williamsburg. Williamsburg began as a gritty industrial neighborhood on the waterfront of north Brooklyn that attracted creative types with low rents, large industrial loft spaces and convenient access to the city via the L train. After the rezoning of the waterfront in 2005, large development projects replacing the industrial spaces with modern high density condos. Located only four stops further away on the L train, Bushwick has become the new neighborhood for young pioneers. It’s a neighborhood that once had limited amenities and primarily served as an industrial hub, but now new restaurants, bars and art galleries have sprouted at a rapid rate. Rents have risen commensurately from $15 per Sq./Ft. in 2013 to the mid $30’s-$40’s today.

The sponsor, Bushwack Capital LLC, will be spending over $1,050,000 or $81 PSF to renovate the property. The sponsor is a privately held, Manhattan-based real estate investment, development and management company that is principally focused on urban property development and management throughout gentrifying neighborhoods of the Williamsburg and Bushwick sub-markets of Brooklyn, New York.

Thorofare placed this loan in its Thorofare Asset Based Lending Fund III, L.P., a $250 million discretionary debt fund.