Madison Realty Capital (MRC) has provided $30 million in pre-development financing to Xinyuan Real Estate to rehabilitate and preserve the former RKO Keith Theater in Queens, Commercial Observer (CO) has reported.
Xinyuan plans to build a 16-story, 269-unit and approximately 350,000-sq. ft. mixed-use condominium and retail development at the theater building’s site, 135-35 Northern Blvd. in downtown Flushing.
Marcus & Millichap’s Gary Sefcik arranged the transaction, with assistance from Rick Lechtman and Dan Lisser, CO has reported.
“Xinyuan wanted to get cash quickly…they’re looking to optimize the business plan and are working on drawings for the project’s (pre-development),” Sefcik was quoted as saying. “They’re using money to demolish the site and take it through the pre-development process.”
The estimated overall project cost has a ballpark between $225 and $250 million, with future construction debt requirements likely to be about $180 million, CO reported a source as saying.
The theater originally opened in 1928. It closed in 1986. Development has been hindered by its landmark status and heritage interior, which Xinyuan will preserve.
The Chinese developer purchased the property for $66 million in 2016. Sefcik said it is developing it without a joint venture partner, but has sought local New York expertise to help in the approvals and construction process. Chinese firm Kuafu Properties will be the third-party project manager.
“Many Chinese developers don’t have the local expertise, so (establishing a joint venture) with veteran New York developers is common, providing LP (limited partner) capital, but Xinjuan is rare because they’re not partnering with anyone; they’ll tackle this all on their own,” Sefcik said. “They’ve hired local New York vets and construction people (to help and advise throughout the process). You don’t typically see that with Chinese firms.”
Plans to transform the building into a retail and condominium project has been approved. However, Sefcik said Xinyuan could evolve or improve the business plan and possibly include a hospitality portion to help serve travelers from LaGuardia Airport.