Rendering of the new residential tower.

The property, currently under construction, will be a 29-story luxury building comprising rental and condominium apartments on Third Avenue, between East 36th and 37th Streets.

One hundred and twenty-six of the apartments will be under master lease to ExecuStay Corporation, a Marriott International subsidiary that provides extended-stay facilities for traveling corporate executives. The remaining 18 apartments will be offered for sale as condo units.

Developing the project is the Maidman family, which currently owns more than two dozen residential properties and has decades of experience in the New York City market. The building is expected to be ready for occupancy in early 2003.

The Strategic Capital investment provides bridge financing for a period of two years, with a one-year extension at the option of the developer. The fund will receive a 16.33% return in each of the two years, in addition to fees. If the term is extended, the fund will be entitled to a preferred return of 20% in the third year, plus an extension fee.

The Strategic Capital fund has now invested approximately 85% of the $15.8 million of equity capital it raised.

Strategic Capital II Is Planned

With less than $2.5 million of capital remaining to be invested from the initial fund, plans are underway to launch a second Strategic Capital fund of approximately $15 million this year, reports Ned H. Cohen, vice president of Wien & Malkin Securities Corp.

"The first fund has achieved its objectives and has alerted the community to our ability to provide structured equity solutions to entrepreneurs in need of capital," Mr. Cohen says. "There remains a significant unmet need for bridge financing for real estate entrepreneurs."

The Strategic Capital initiative was established to provide high current returns from short-term preferred equity or debt investments in targeted residential, retail and office property. The fund is in addition to Wien & Malkin's efforts to identify other properties to acquire outright, and provide our investors with an alternative approach to real estate investing.