Scale Lending, the joint lending vehicle of Slate Property Group, closed a $108 million construction loan on April 17 for CSC Real Estate's conversion of 770 Second Avenue — also addressed as 300 East 42nd Street — in Manhattan's Murray Hill neighborhood. The deal was brokered by Morris Betesh, Morris Dabbah, and Louis Halperin of Arrow Real Estate Advisors. It is among the larger single-asset construction loans written for an office-to-residential conversion in New York City this cycle.
CSC acquired the 18-story property for $52 million in April 2025 from David Werner — who had himself purchased it from Fortress Investment Group just two months earlier, also for $52 million, per ACRIS records. The back-to-back transfers at an identical price suggest Fortress accepted a negotiated exit rather than a competitive auction clearing. CSC's basis, then, is $52 million before carrying costs and now $108 million in construction debt, putting total capitalization north of $160 million before equity overhead.
The conversion plan targets 12 of the building's 18 floors, producing 140 rental units, 35 of which — exactly 25 percent — will be designated affordable under New York's 467-m tax exemption program. That program offers exemptions of up to 35 years on converted nonresidential buildings that include affordable residential units, making the tax shield a core element of the deal's underwriting. Without the 467-m abatement, the economics on a $160-plus million capitalization for 140 units in Murray Hill would face significant stress against current market rents.
The build-out also includes 11,000 square feet of amenity space, with a targeted completion in the first quarter of 2027. That timeline gives CSC roughly four quarters to complete construction and begin lease-up into what is, as of April 2026, a Manhattan rental market still posting vacancy rates below 3 percent in the midtown corridor, according to CBRE reported figures for Q1 2026. The compressed delivery window is aggressive but not unusual for a mid-rise conversion with an already-stripped shell.
One wrinkle emerged in public records filed Thursday: CSC, operating as 300 East Holdings, sold office condo unit No. 2 within the building for $22 million to an LLC tied to independent investor Moses Mizrahi, per ACRIS records. The retained office unit will apparently continue operating as commercial space, carved out from the residential conversion footprint. Whether the $22 million sale proceeds were structured as a paydown, a partial equity recapture, or simply run parallel to the construction financing is unclear — a CSC spokesperson declined to provide details. What is clear is that the effective net basis on the residential portion, after backing out the $22 million condo disposition, drops to approximately $30 million on the land — a figure that sharpens the project's equity cushion considerably.
Scale Lending's willingness to write nine figures on a single Murray Hill conversion reflects a broader posture among non-bank bridge and construction lenders who have stepped into the space vacated by regional banks still working through legacy office exposure. Slate Property Group's lending arm has been an active writer of conversion-adjacent construction debt in New York, and this loan continues that pattern. Arrow's Betesh called the deal evidence of "continued lender appetite for well-located conversion opportunities," a characterization that is accurate but worth calibrating: appetite is selective, concentrated among sponsors with demonstrated execution records, and the 467-m program's affordability mandate is increasingly the price of admission for institutional debt.
The 467-m program, notably, is not unlimited in duration or scope. Albany has periodically revisited the terms of conversion incentive programs, and any future modification to the abatement schedule would reprice a significant portion of the pipeline that currently depends on it. Developers and their lenders are, in effect, underwriting a policy assumption as much as a real estate one.
CSC principals Alberto and Salo Smeke have been explicit about their ambitions to scale into larger repositioning opportunities. At a $160-plus million total cost basis for 140 units, 770 Second Avenue is already at the upper threshold of what a mid-block Murray Hill conversion can absorb before per-unit economics become punishing. The stabilized rent needed to service the $108 million construction loan — assuming a floating rate in the 300-to-350 basis point spread range over SOFR, per current market convention for construction facilities of this type — implies effective gross rents per unit that leave little room for lease-up velocity shortfalls.
The $52 million that changed hands twice in 60 days before CSC ever took title to 770 Second Avenue is the most telling detail in this transaction. Fortress moved the asset at no premium after what was presumably a distressed hold; Werner flipped it at cost rather than attempting a conversion himself. CSC stepped in, structured the 467-m play, carved out and sold a $22 million office condo, and closed $108 million in construction financing — all within roughly 12 months of acquisition. Whether the numbers ultimately work depends on a 2027 lease-up at rents the market has not yet been asked to deliver at this address. Scale Lending is betting it will.