S3 Capital Originates $102 Million Construction Loan forOffice-to-Residential Conversion in Midtown Manhattan

New York, NY – June 23, 2026 – S3 Capital (“S3” or “the firm”), one of the most active private construction lenders nationally^[1], today announced it has originated a $102 million construction loan for 311 West 43^rd Street, a 15-story, 168,299 gross square foot office building for a planned office-to-residential conversion. The transaction marks S3's first office-to-residential conversion, following years of careful evaluation.

Located on 43rd Street between 8th and 9th Avenues in Midtown West, the 15-story property will be converted into a mixed-use building comprising 160 residential rental units and 39,712 rentable square feet of commercial space. The commercial space has already been leased to three tenants through 2036.

The project is led by sponsor Hershy Silberstein alongside general contractor Bluesky Builders, who together have successfully delivered thousands of units. S3 has financed numerous prior projects with the sponsor and/or contractor.

"We've underwritten many office-to-residential conversions over the years, but this is the first where everything aligned,” said Shawn Safdie, Head of Origination at S3. “It starts with the sponsorship group, who we have developed a deep repeat relationship with. They've earned our trust by executing time and again. Combine that with one of Manhattan's most supply-constrained submarkets and a building layout that's ideal for a conversion project, and the decision to pursue this deal was easy.”

“S3 Capital always impresses us with their flexibility and speed to close. This transaction was time-sensitive and the S3 team went above and beyond to accommodate our needs,” said Meir Landau, CFO at Bluesky Builders. “We come back to S3 time and time again because they truly understand construction which consistently enables us to execute more efficiently.”

Midtown West is one of Manhattan’s most supply-constrained markets, delivering ~4.5% annual rent growth over the past five years with stabilized vacancy at ~3.5%.^[2]

The conversion will also benefit from the 467-m tax abatement program, with 25% of units reserved at an average of 80% of area median income (AMI).

“We have always believed that public-private partnerships are the best way to stimulate housing development. The 467-m program is a pragmatic solution that is directly alleviating the shortage of rental units here in Manhattan,” said Robert Schwartz, Managing Principal at S3 Capital. “When policies align incentives in the right way, more housing gets built.”

The property will benefit from its proximity to the Broadway Theater District, Bryant Park and Hudson River Park; A/C/E access at Port Authority and 1/2/3/7/N/Q/R/Q at Times Sq-42^nd St.

The financing was arranged by Morris Betesh, Israel Mermelstein, Jack McPhail, and Joseph Kean at Arrow Real Estate Advisors (ArrowREA).

“Successfully financing an office-to-residential conversion in NYC requires a deep understanding of floor plans, existing tenancy, zoning, tax, and the capital markets. 311 West 43rd required the ArrowREA team to bring all of those disciplines together at once, and our expertise rests squarely at that intersection. We were able to identify a lender who had the sophistication and expertise to structure a thoughtful solution for the borrower, and we are excited to see the project come to life,” said Morris Betesh, Founder and Managing Partner of Arrow Real Estate Advisors. 

S3 Capital remains committed to alleviating the ongoing U.S. housing shortage by identifying opportunities to lend on housing-oriented commercial developments in areas with acute supply-demand imbalances across the country.

About S3 Capital

S3 Capital is a national real estate lender specializing in construction and bridge loans for multifamily development. With experienced and dedicated teams focused on origination, underwriting, and construction management, they take an active and hands-on approach to lending that aims to mitigate risk both before and during the life of the loan. Since launching its credit business in 2013, S3 has originated over 900 loans totaling more than $9.9 billion. With a focus on multifamily residential in and around Tier-1 markets, S3 seeks to achieve equity-like returns that are both resilient and current income-oriented. S3 Capital is wholly owned by Spruce Capital, founded in 2007, which also owns Spruce Properties, an owner of approximately 5,000 multifamily units primarily located in the Midwest and Sunbelt.

About Arrow Real Estate Advisors

Arrow Real Estate Advisors, founded in 2024 by industry veteran Morris Betesh, is a leading real estate finance advisory firm that partners with the nation's top developers. The firm delivers comprehensive, customized financial solutions, specializing in permanent financing, construction financing, debt structuring, and raising joint venture equity. Operating across all asset classes—including luxury residential, commercial office, hotels, retail, and industrial warehouses—Arrow Real Estate Advisors is dedicated to exceeding client expectations and achieving exceptional results. With a dynamic team of some of the most driven, innovative, and sharpest professionals in the industry, the firm consistently provides creative solutions and leverages its expansive network of financial partners. Headquartered in New York City, Arrow Real Estate Advisors operates nationwide, setting new standards in real estate finance.

^[1] MSCI, “Capital Trends: US Big Picture”, August 2025

^[2] Costar, June 2026