Most multifamily developers looking for construction loans had a tough time in 2008.

Borrowers ran into higher spreads and stricter underwriting, with debtservice coverage ratios rising and loanto- value ratios falling, as the year wore on. And that was before the capital markets went haywire in late September, sending the London Interbank Off ered Rate soaring to almost 8 percent.

But in the middle of a turbulent year, a partnership of Extell Development, the Carlyle Group, and RREEF Alternative Investments secured a construction loan of $613.6 million, the largest multifamily construction loan of the year.

The loan is for the development of two high-rise buildings on the Upper West Side of Manhattan, along Riverside Drive between 62nd and 63rd streets. These buildings are additions to Riverside South, a 13.5-acre area that Carlyle and Extell purchased for $1.8 billion in 2005. The buildings will join two luxury condo developments, the Avery and the Rushmore, opened by the firms in 2007.

Most large construction loans done in 2008 were syndicated—meaning more than one bank participated in the loan as a way of sharing risk. The bigger the loan, the bigger the syndicate. This loan was no exception.

“The main eff ect the credit crunch had on this loan was the fact that it took more than one lender given its size of more than $600 million,” says Robert G. Stuckey, head of Carlyle's U.S. Real Estate Team.

The loan was in fact syndicated among a consortium of nine banks, led by Deutsche Bank. RREEF Alternative Investments is a subsidiary of Deutsche Bank's Asset Management division.

The senior portion of the loan represents 60 percent loan-tocost (LTC) with an additional mezzanine portion achieving roughly 72 percent LTC. The loan was broken down into $520 million of senior debt and a $93 million mezzanine loan. The companies did not disclose rates and terms.

While the deal's size is impressive, the expansion of Riverside South is noteworthy in that it refl ects the strength of Manhattan's condo market at a time when many others, including those in the outer New York City boroughs, have fallen flat.

The average price for a co-op or condo in Manhattan rose to $1 million, or $891 per square foot, in the second quarter of 2008, up from $831,000, or $803 per square foot, the year before, according to a report from the Real Estate Board of New York.

“We are more than 70 percent sold out at Avery and the Rushmore, and we have achieved above pro-forma end-unit pricing,” says Stuckey. The remaining units were reportedly selling for more than $1,400 a square foot at the Avery and more than $1,600 a square foot at the Rushmore earlier this year.

The two new buildings under development include the Aldyn, a 38-story, 287-unit tower with more than 4,000 square feet of commercial space and a 121-space underground parking garage. Its top 29 fl oors will be dedicated to 150 large for-sale condo units, with an average size of 1,707 square feet. The remaining 137 units will be luxury rental apartments, averaging 1,095 square feet.

Adjacent to the Aldyn is an as-yet unnamed building, a 23-story, 209-unit tower devoted entirely to rentals, also under construction.

At press time, the foundations for the Aldyn and its sidekick were complete, and Extell was beginning to go vertical.

These towers are just two in an ongoing series. The companies plan to expand construction on the 13.5-acre area upon their completion. Plans are in the works for an underground amenity center, complete with a bowling alley, a pool, and a full-service spa, to complement other amenities such as a climbing wall, a basketball court, a squash court, and hotel-style concierge services.

“This will not be the last development at Riverside,” vows Stuckey. “Carlyle [and] Extell own another approximate 10 vacant acres,” at Riverside South.