A Properties Project Development In NYC

Industrial Building Maspeth, Queens, NY

Posted By on July 4, 2012 in Apartments |

Industrial Building Maspeth, Queens, NY


We had a financing client and sometimes partner, Pet Galaso, who was the developer-king of single tenant, net leased industrial buildings, in Maspeth,Queens, NYC.   Pete built beautiful buildings, at rock bottom cost and triple net leased them to the finest Fortune Five Hundred companies – at fixed rents for 10 to 20

year terms.  We financed and in some cases co-developed fifteen buildings with Pete.  We placed the mortgages with NYC savings institutions at the lowest interest rates in the market.  Cash flow on the properties was more than satisfactory.  There was a fatal flaw.  We took five year, fixed rate mortgages with little or no amortization, for 100% or more of development cost.  Of course as the mortgage loans came due, interest rates were in a prolonged and vicious spike, the likes of which had never been seen before in living memory.   Most of the buildings were lost. The devastating lesson was don’t borrow short term to invest long term – match maturities or hedge in some other way.  It wasn’t long after this major rate spike that the innovative sale of interest rate caps was in commenced