Downtown Athletic Club

Transaction Overview
Property Type: Health club / Boutique hotel
Transcation: Property acquisition / Debt financing

Transaction Background
This 38-story, Art Deco skyscraper opened in 1930 as the Downtown Athletic Club ("DAC"), with facilities including a swimming pool, gymnasium, boxing ring, squash and tennis courts, as well as dining rooms and hotel rooms. The DAC is home of the coveted Heisman Trophy, given every year to the most outstanding college football player.

As a result of an inability to provide funds for capital expenditures, the Downtown Athletic Club was struggling in highly contentious chapter 11 bankruptcy proceedings.

Transaction Summary
CBA successfully negotiated and facilitated a resolution of all material financial issues in the chapter 11 proceedings and acquired the DAC's headquarters at 19 West Street in Manhattan as part of a consensual plan of reorganization. CBA, through its affiliate, Cheslock Bakker Opportunity Fund L.P. (CBOF), was able to concentrate its equity investment in the upper floors of the property by immediately dividing the property into a condominium and conveying floors 2 to 13 to the reorganized DAC in exchange for an above-market rate mortgage note retained by CBOF. Subsequently, CBOF negotiated a profitable sale of the upper floors of 19 West Street, greatly exceeding targeted investment returns two years ahead of schedule. Two years later, CBOF sold the mortgage note for cash equal to the principal amount of the note plus all accrued interest, completing the full recovery of capital and full realization of profit on this transaction.