Justin Elghanayan: Rockrose Development’s Next Generation

Are there neighborhoods, like Dumbo or Williamsburg, that you’ve been inspired by?
We are creating a neighborhood, but I think the key to me at least is that there’s already this core kernel of spirit in the neighborhood because it has a truly deep artistic and cultural past with PS1 and the SculptureCenter. There’s tons of cultural institutions so it has this sort of gritty, existing artistic vibe, which I think is essential to creating a great neighborhood. So it’s not just like we’re going out into the middle of the desert and saying, you know, ‘We shall proclaim this a cool neighborhood.’ It has this sort of incipient potential, and we just want to draw it out.

In the brief time it was open, M. Wells gained attention in Long Island City and the culinary world. Have you spoken to the M. Wells people about leasing the garage?
We have spoken to them, and I don’t want to speak too much about the leasing of the garage, for now, because it’s not public information yet. But we’ve spoken to several groups, and M. Wells is one of the groups we’ve spoken to.

Rockrose Development has traditionally taken a conservative approach to financing and, in many cases, avoided risky instruments like mezzanine loans. With Linc LIC are you continuing that tradition or have you found new ways to fund the project?
It’s in the same tradition. It’s a $155 million loan, which is consistent on a LTV basis to what we generally do. We’re putting in a massive amount of our own equity with no partners. Our total equity in the deal will be over $100 million so we’re very confident in the neighborhood, as evidenced by our equity contribution. In terms of getting financing, it’s a consortium of three banks: Wells Fargo, Bank of America and Helaba. I’m not the first one to say this, but the well-established family developers are able to get financing right now and a lot of smaller developers are not, and that’s containing the supply. As a result, we’re seeing healthy rent growth in our portfolio.

How has Rockrose fared since 2009, when Henry’s brothers—and your uncles—divided the company and formed TF Cornerstone?
It’s been fantastic. We’ve gotten this project going, which is exciting. And in tough economic times, it’s great to get this kind of project happening.

Unlike other family-owned real estate companies that have splintered, the Rockrose division has been relatively amicable. What do you attribute that to?
It’s not surprising and it makes complete sense. First of all, we had an enormous advantage, which is that Henry, Tom and Fred were very smart about creating a good contract for the partnership. They had a mechanized methodology in place for how to divide the company so there was little room for conflict because everything was laid out, down to the day. It was a fair system so everyone got a fair share.