Yellowstone Partners has secured a $203 million financing package to convert the historic Candler Building in New York City from office use to multifamily residential. The circa-1912, 25-story property at 221 W. 41st St. totals 221,357 square feet and will be reconfigured into a 176-unit apartment building.
BHI, the U.S. Branch of Bank Hapoalim, B.M., is providing a $167 million senior loan to fund the office-to-residential conversion. Naftali Credit Partners is supplying an additional $36 million in mezzanine financing, bringing the combined debt commitment on the project to $203 million.
The planned residential program includes a mix of studio, one-bedroom, and two-bedroom apartments. Of the 176 units, 44 are expected to be reserved for households qualifying under New York City’s 467-M Affordable Housing conversion program, aligning the project with the city’s efforts to add income-restricted housing within existing building stock.
Describing the backdrop for the transaction, Glenn Grimaldi, CEO of Naftali Credit Partners, noted that New York City is continuing to adapt to changes in its office market. He indicated that well-located office-to-residential conversions, such as the Candler Building project, can create new housing options in dynamic neighborhoods while repositioning older office inventory.
Yellowstone acquired the Candler Building in 2022 through a joint venture formed with major international institutional investors. At the time of acquisition, the partnership initially contemplated a lodging conversion for the property. Those plans have since shifted toward multifamily, with the newly arranged financing supporting the residential redevelopment of the legacy office tower.
