Madison Realty Capital closes $19 million in debtor-in-possession financing for 11 East 36th St.

Madison Realty Capital (MRC), an institutionally-backed real estate private equity firm focused on real estate equity and debt investments in the middle markets, has closed $19 million in debtor-in-possession (DIP) financing for a residential conversion project located at 11 East 36th St. in Midtown South. The DIP funding prevented a forced sale through the Chapter 11 bankruptcy process and will enable the borrower to retain control of the property. MRC completed the DIP financing transaction within an extremely short timeframe and was able to fund and close before the property was scheduled for sale via bankruptcy auction. Proceeds of the first mortgage loan from MRC will be used to retire previous debt, simplifying the capital stack and permitting the borrower to proceed with the sellout of residential condominium units through the bankruptcy process. Josh Zegen, co-founder and managing principal of MRC, said, "MRC is a leader in providing flexible capital for special situations involving real estate. We have a unique ability to quickly evaluate and analyze capital structure, property value, and borrower, and therefore we can close quickly on time-sensitive deals. This deal is a perfect example of how fast, flexible capital can really make a difference for the borrower. The property was in Chapter 11 bankruptcy, with a complicated capital stack, and was on the verge of being auctioned. The borrower had an immediate need, and MRC's ability to quickly supply the necessary financing will help unlock the value of a well-located condo conversion project with great potential." Built in 1912, the 14-story, 68,727-square-foot property was originally an office building. The borrower redeveloped the property as a 66-unit residential condominium with 2 ground floor retail condominium units and 5,320 s/f of second-floor office space. The upper-floor residential units feature 12.5-foot ceilings. MRC is a New York-based real estate private equity firm that pursues real estate equity and debt investments in the middle market. Founded in 2004, MRC has invested in approximately $2.5 billion of transactions in the multifamily, retail, office and industrial sectors.