$350M pre-foreclosure filed at Shorenstein’s 1.1M sf Garment District building

The special servicer for an allegedly defaulted $350 million loan filed a pre-foreclosure action March 15, 2024, at Shorenstein Properties’ 1.1-million-square-foot Garment District office building at 1407 Broadway.

Mount Street, a London-based financial group, acting as special servicer, filed the action in New York State Supreme Court, approximately six months after the loan was moved into special servicing, as the Commercial Observer reported at the time. Steve Luther leads special servicing operations in the United States, according to the firm’s website.

Case LINK

The Commercial Observer reported in September 2023 that the securitized loan was moved to special servicing. Court filings represent the position of one party and are not necessarily accurate or complete.

According to the complaint, “The Mortgaged Property includes a ground lease and the building known as 1407 Broadway, which, upon information and belief, is a 43-story building with approximately 1.1 million square feet of commercial office space. As set forth below, Borrowers, among other things, failed to make payments under the Loan Documents including, without limitation, the interest payment due in August 2023 and principal and interest payments due upon maturity of the Loan (as defined herein). To date, these Events of Default (as defined in the Loan Agreement (as defined herein)) continue to exist.”

The office building in Garment District has 911,896 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 205 feet and is 301 feet deep with a total lot size of 45,170 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $273.8 million. The most recent loan totaled $350 million and was provided by Barclays on November 1, 2019.

Prior sales and revenue

The last time the property sold was when Shorenstein bought the leasehold for $330 million on April 30, 2015. Solil Management, which manages the assets for the estate of the late Sol Goldman, owns the fee.

Shorenstein Properties through the entity Sri Eleven 1407 Broadway LLC as borrower signed a $350 million loan with lender Barclays Capital Real Estate on November 1, 2019.
The average loan per buildable square foot is $384.
The prior debt of about $270 million was held by Bank of America and assigned to Barclays. JLL Capital Markets’s Geoff Goldstein, Michael Gigliotti and Christopher Peck brokered the deal, the Commercial Observer reported.

The 911,896-square-foot property generated revenue of $39.6 million or $43 per square foot, according to the most recent income and expense figures.

Violations and lawsuits

According to city public data, the property has received $20,370 in OATH penalties in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

The neighborhood

In Garment District, The majority, or 69 percent of the 51.8 million square feet of commercial built space are office buildings, with hotel buildings next occupying 12 percent of the space. In sales, Garment District has near average sales volume among other neighborhoods with $629.9 million in sales volume in the last two years and is the 15th highest in Manhattan. For development, Garment District is the 5th most active neighborhood among other neighborhoods. It had 6.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 13 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the seven commercial properties representing 1,398,057 square feet of the 2,633,484 square feet. The largest owner is L.H. Charney Associates, followed by Larry Wohl and then Shorenstein Properties. There are no active new building construction projects on this tax block.

The owner

The PincusCo database currently indicates that Shorenstein Properties owned at least one commercial property in New York City with 911,896 square feet and a city-determined market value of $273.8 million. (Market value is typically about 50% of actual value.) The portfolio has $350 million in debt, borrowed from Barclays. The portfolio consists of at least a single office property. It is located in Manhattan.

The surrounding

Within a 400-foot radius of 535 7 Avenue, PincusCo identified two commercial real estate items of interests occurred over the past 24 months. Of those two items, two were loans above $5 million totaling $44.8 million. The most recent of the two was GFP Real Estate and Steinberg & Pokoik Management in which borrowed $28 million from Apple Bank for Savings secured by the 364,000-square-foot, 24-unit office building (O4) on 1430 Broadway on April 18, 2023.

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