$74.7M foreclosure auction scheduled May 29 for ATCO’s Garment District building, 3rd large auction that day

A referee scheduled a foreclosure auction on May 29, for ATCO Properties & Management’s 165,000-square-foot office building at 240 West 35th Street in the Garment District, Manhattan, with a total judgment of $74.7 million, the notice of sale published yesterday, shows. The sale is planned for 2:15 p.m. in room 130 in the New York County Courthouse in Lower Manhattan.

This is the third large foreclosure auction set for the same time and location. The largest so far is the auction of Kushner Companies’ Times Square retail condominium at 229 West 43rd Street that it purchased in 2015 for $295 million. This sale is also planned for 2:15 p.m. in the New York Country Courthouse. The other large auction planned for the same time and location is Madison Realty Capital’s retail condominium unit at the base of One Hanson Place, which it bought in partnership with Siguler Guff & Company for $18 million in 2015.

On July 3, 2023, MetLife filed a $72.7 million pre-foreclosure action against the building, 850437/2023, which PincusCo reported at the time. The court issued the judgment of foreclosure and sale in January, which was unopposed by ATCO, the court records show.

According to the complaint, “The Loan matured pursuant to its terms on February 1, 2023. The Borrower, however, has failed to repay the amount due and owing to Lender.”

MetLife provided the loan January 5, 2018. ATCO bought the building in December 2016 from RPW Group for $108 million. The large Israeli insurance firm Migdal Group bought a 49 percent stake in the property in 2017. It’s unclear if Migdal still owns a stake in the property.

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 $472.1 million in sales volume in the last two years and is the 18th highest in Manhattan. For development, Garment District is the 5th most active neighborhood among other neighborhoods. It had 7.4 million square feet of commercial and multi-family construction under development in the last two years, which represents 14 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 17 of the 27 commercial properties representing 948,897 square feet of the 2,262,329 square feet. The largest owner is Albert Srour, followed by Atco Properties & Management and then Dennis Riese. On the tax block, there were three new building construction projects totaling 196,772 square feet. The largest is a 300-unit, 157,517 square-foot hotel/dormitory/shelter (R-1) building submitted by Chetrit Group and filed by Meyer Chetrit with plans filed April 5, 2016 and permitted August 21, 2017. The second largest is a 27,048 square-foot business (B) building submitted by Churchill Real Estate Holdings and filed by Jake Borden with plans filed April 26, 2016 and permitted December 10, 2018.

The owner

The PincusCo database currently indicates that ATCO Properties & Management owned at least five commercial properties with 316 residential units in New York City with 923,847 square feet and a city-determined market value of $239.6 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 71 percent of the 923,847 square feet of built space are office properties, with elevator properties next occupying 29 percent of the space. They are all located in Manhattan.

The surrounding

Within a 400-foot radius of 246 West 35 Street, PincusCo identified seven commercial real estate items of interests occurred over the past 24 months. Of those seven items, four were sales above $5 million totaling $169.4 million. The most recent of the four was Hiwin Group USA which bought the development site (V1) on 245 West 34th Street for $15 million from David Cohen on March 22, 2024. Of those seven items, three were loans above $5 million totaling $137.9 million. The most recent of the three was Jenel Management in which borrowed $88 million from Aareal Capital secured by the 201,307-square-foot, four-unit mixed-use building (K4) on 223 West 34th Street and one other property on January 13, 2023.

Direct link to the property’s ACRIS page.