$33M pre-foreclosure at ‘world’s tallest’ modular hotel dev site in NoMad

Arizona-based lender Avana Capital filed a $33 million pre-foreclosure action last week at the stalled construction site at 842 Sixth Avenue in NoMad, where developers planned the world’s tallest modular hotel project, according to a press release from 2019 announcing $65 million in construction funding.

Case LINK

The original maximum senior loan was $50 million, but the complaint says only $25.5 million of that is outstanding.

Rob Chun of 842 Enterprises, Inc. submitted a new building construction project for a 168-key, 77,819 square-foot hotel (R-1) building at 842 Sixth Avenue in NoMad, Manhattan. The plan was filed with the New York City Department of Buildings on November 13, 2017 under job number 121204419. It calls for the construction of a 26-story building.

According to the complaint, “By letters dated September 20, 2020, December 30, 2020, and September 29, 2021, Lender provided Borrower notices of its Events of Default and notice of acceleration… Pursuant to a Forbearance and Loan Modification Agreement (“Forbearance Agreement”) dated May 20, 2022, executed by Lender, Borrower, and Guarantors, Borrower and Guarantors acknowledged their Events of Default… Pursuant to an Amended and Restated Forbearance and Loan Modification Agreement (“Amended Forbearance Agreement”) dated March 10, 2023, executed by Lender, Borrower, and Guarantors, Borrower and Guarantors acknowledged their Events of Default…

“Lender made a mortgage loan (“Loan”) to Borrower in an amount up to $50,000,000.00 pursuant to (i) a Building Loan Agreement dated March 7, 2019 (the “Building Loan Agreement”), and (ii) a Project Loan Agreement dated March 7, 2019.”

The total maximum loan was reported in 2019 to be $65 million. According to a press release from the lender in 2019, “AVANA Capital closed a $65 million construction loan to 842 Enterprises, providing funding to develop with modular construction of the AC Marriott hotel located in the Chelsea area of Manhattan, NY. The property will have 26 stories, 168 guest rooms, and will provide guests with plenty of amenities. At completion, it will be the tallest modular hotel in the world.”

Violations and lawsuits

According to city public data, the property has received one DOB violation, $2,500 in ECB penalties, and $6,550 in OATH penalties in the last year.

The neighborhood

In NoMad, The majority, or 66 percent of the 12.8 million square feet of commercial built space are office buildings, with hotel buildings next occupying 15 percent of the space. In sales, NoMad has near average sales volume among other neighborhoods with $364.4 million in sales volume in the last two years and is the 29th highest in Manhattan. For development, NoMad has near average amount of major developments among other neighborhoods and is the 14th highest in Manhattan. It had 2.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 17 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 11 of the 23 commercial properties representing 467,961 square feet of the 891,689 square feet. The largest owner is Hyang Ja Lee, followed by Lam Group and then Vanbarton Group. On the tax block, there were three new building construction projects totaling 750,963 square feet. The largest is a 373,990 square-foot business (B) building submitted by HFZ Capital Group and filed by Anthony Marrone with plans filed September 19, 2017 and permitted November 19, 2018. The second largest is a 401-unit, 299,154 square-foot hotel  (R-1) building submitted by Lam Group and filed by John Lam with plans filed November 7, 2014 and permitted August 19, 2015.

The surrounding

Within a 400-foot radius of 844 Avenue Of The Americas, PincusCo identified five commercial real estate items of interests occurred over the past 24 months. Of those five items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on January 7, 2022 for the $550,000 renovation of 82,967-square-foot residential (R-2) building with 55 residential units at 846 6th Avenue. Of those five items, four were loans above $5 million totaling $186.2 million. The most recent of the four was Joginder Sharma in which borrowed $23.5 million from State Bank of Texas secured by the 50,150-square-foot, one-unit hotel (H3) on 32 West 29th Street on November 14, 2023.

Direct link to the property’s ACRIS page and link to DOB NOW portal.