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partnership led by Andrew Farkas' Island Capital has acquired a distressed New York multifamily portfolio previously owned by Blackstone. The deal involves 11 buildings concentrated in the Upper East Side and Chelsea, with a total of 637 units. Island Capital and JW Capital Management seized control of the properties after acquiring the mezzanine debt from Atlas Capital Group, which had bought the debt in August 2023.

    To pay off the senior mortgage, Island and JW closed on a $270 million loan from Bridge Investment Group. The deal was brokered by Newmark's Jordan Roeschlaub and Nick Scribani. This move comes after Blackstone's $272 million senior loan landed in special servicing due to debt service nearly tripling between 2021 and 2023, putting pressure on cash flow.

    The new bridge loan has a floating rate and a five-year term, including extensions. The choice of a floating-rate implies a bet that rates will fall over the next several years, following the Federal Reserve's recent rate cuts. This move is seen as a value-add play, given the age and renovation status of the properties. With new development in Manhattan fetching a median rent of $5,530 compared to $4,200 for existing product, Island Capital may be positioning itself for future gains.