Silverstone and Related back Brooklyn multifamily recap with preferred equity

Silverstone Partners and Related Fund Management have teamed up to supply preferred equity for One Sunset, a newly built rental building in the Greenwood Heights section of Brooklyn, according to IREI. The 14-story, 187-unit property was developed under the final version of the Affordable New York program, the 421-a tax break, and 25 percent of its apartments are set aside as affordable housing.

Silverstone, a thematic real estate investment manager, says the preferred position is credit-enhanced by the significant equity the property's sponsors contributed. The sponsors are two local developers who are co-sponsoring the deal. Manoj Ramprakash, Silverstone's founder, said the investment validates the firm's focus on high-quality multifamily in markets with robust economic drivers. "By maintaining a flexible mandate, we can navigate the capital stack to capture the best relative value and structure," he said.

The financing is designed to carry One Sunset through lease-up and to stabilization. From its one- to three-bedroom apartments, residents get an unobstructed 360-degree view that takes in the Brooklyn waterfront, according to IREI.

The recap puts preferred equity on a Class A multifamily asset before it is stabilized, with the sponsors' equity in place below as a cushion. Private investors are still willing to underwrite the lease-up of newly delivered Brooklyn supply in exchange for yield, without the comfort of a stabilized rent roll.