On June 1, BHI committed $169.5 million to a joint venture between Quantum Pacific Realty and MetroLoft to convert 767 Third Avenue from a 282,000-square-foot office building into 337 apartment units. The construction loan is the latest in a series of bets by Bank Hapoalim's U.S. branch on Nathan Berman's conversion playbook.
BHI is not a newcomer to this sponsorship. In December 2024, it provided a $55 million bridge loan to fund the JV's $88 million acquisition of the building from Sage Realty. That same month, BHI also extended an $88 million senior term bridge loan for pre-development work on another MetroLoft conversion at 845 Third Avenue. Total BHI exposure to these two projects: $312.5 million.
The arithmetic is straightforward. BHI has now committed $312.5 million in aggregate across two adjacent office-to-residential conversions in Midtown East. Both are sponsored by the same JV: MetroLoft, led by Nathan Berman, and Quantum Pacific Realty, controlled by Israeli billionaire Idan Ofer.
Berman is the most prolific office-to-residential converter in Manhattan. His firm has completed over 2,000 conversion units since 2004, per company materials. Ofer's Quantum Pacific brings balance sheet depth and a long-term hold perspective. The combination is precisely the kind of sponsorship that BHI CEO Gil Karni described as "experienced sponsors" in his statement.
The 767 Third Avenue plan calls for 337 apartment units and 68,000 square feet of retail space. Amenities include a fitness center, sports simulator, spa, treatment rooms, coworking space, and a rooftop lounge. The retail component is notable: 68,000 square feet on a 282,000-square-foot base means roughly 24% of the building's square footage will remain commercial.
That retail allocation is a bet on Midtown East's post-pandemic recovery. Office-to-residential conversions typically strip out most commercial square footage. Keeping nearly a quarter of the building as retail suggests the sponsors see ground-floor and lower-level demand from the surrounding office worker base and new residents.
BHI's lending strategy is increasingly concentrated on conversion financing. The bank provided the $55 million bridge and $88 million pre-development loan before this construction loan. That sequencing—bridge, pre-development, construction—shows a lender willing to follow a sponsorship through multiple capital stack layers on multiple assets.
This is not a market-wide phenomenon. Most regional and national banks have pulled back from construction lending entirely. Office-to-residential conversion financing is even more scarce because of the execution risk: structural changes, zoning approvals, tenant relocations, and uncertain lease-up timelines. BHI is picking winners, not betting on the sector broadly.
The broader implication for capital markets is clear. Lenders are no longer allocating capital by asset class or geography. They are allocating by sponsorship quality and track record. BHI's willingness to write $312.5 million across two conversions for the same JV signals that relationship-driven lending is back—but only for the top tier of operators.
For institutional investors and REIT analysts, the takeaway is granular. Track which sponsors are securing construction financing and at what terms. The gap between Berman-level sponsorship and the rest of the market is widening. Lenders are not returning to office or conversion lending broadly; they are returning to specific people with proven execution.
BHI's $169.5 million construction loan is a data point, not a trend. But it is a data point that reveals where patient capital is flowing: to sponsors with a decade-plus track record, a balance sheet partner, and a specific conversion playbook. The rest of the market will have to wait.