Argent Ventures pays $17.2M to Riese for last portion of fee in bankrupt Times Square hotel it did not own

Andrew Penson’s Argent Ventures through the entity 1609 Broadway LLC paid $17.2 million to the Riese Organization through the entity 1609-11 Broadway, LLC and The Sylvia Riese Family Limited Partnership for a 2,185-square-foot parcel of three floors in the Crowne Plaza Hotel (H1) at 1601 Broadway in Times Square, Manhattan. The three floors are the basement, the ground floor and the second floor.

Since the basement is typically assigned very little value, in order to assign a rough estimate of the price per foot, PincusCo allocated through a 10 to 1 ratio 90 percent of the value to the ground floor and 10 percent to the second floor. The calculation using yields a price of just over $7,000 per foot for the 2,185-square-foot ground floor. Blended for the two floors — totaling 4,370 square feet — the price is just under $4,000 per square foot.
PincusCo reported this property had sold as part of the Argent Ventures and Vornado Realty Trust Chapter 11 filing for the property, but the price at the time was not disclosed.

The deal closed on December 28, 2022 and was recorded on January 6, 2023.
The signatories for the Riese Organization entities were Cynthia P. Adams and Robert Grimes. The signatory for Argent Ventures was Andrew Penson.

On December 28, 2022, Andrew Penson’s Argent Ventures and Vornado Realty Trust broke a long-running dispute over control and management of the Crowne Plaza Hotel, office, retail and signage at 1601 Broadway in Times Square, by filing a 63-page bankruptcy plan that envisions a potential sale of the asset. The filing notes Argent holds $418.8 million in senior debt, as well as a defaulted $80 million mezzanine loan.

The filings noted that to clear a path for the agreement, the Argent Ventures through the entity 1609 Broadway LLC yesterday purchased the leased fee of a 2,185-square-foot parcel previously owned by the Riese family for an undisclosed amount. With that purchase, the debtors control the entire fee interest, significantly reducing the ownership uncertainty. Argent purchased the Walber fee position, with about 11,000 square feet of the parcel, May 3, 2022 from SL Green Realty for $121 million. Vornado owned the balance of the fee.

Most of the fee is owned by Vornado Realty Trust affiliated entities, but those entities ceded management control to Argent Ventures after Penson’s company bought the defaulted mezzanine debt from Apollo Global Management and then exercised the management control option.

The bankruptcy plan envisions a sale of the property in short order, in under 40 days, with Eastdil Secured as the broker managing the marketing and sale.

Prior sales and revenue

Prior to this transaction the Riese Organization had not purchased any other properties and sold two properties in two transactions for a total of $57.2 million over the past two years.

Violations and lawsuits

The property was involved in two lawsuits and one bankruptcy over the past two years. The highest value suit was a $121 million money judgment concerning a lease filed on September 16, 2021, by Vornado Realty Trust against Friedland Properties and Walter & Samuels. The bankruptcy was filed on December 28, 2022, by Argent Ventures, Vornado Realty Trust, Theatine Partners, and Richard J. Shinder citing assets of $418.8 million. In addition, according to city public data, the property has received one DOB violation and $8,150 in OATH penalties in the last year.

The neighborhood

In Midtown West, the majority, or 75 percent of the 76 million square feet of commercial built space are office buildings, with hotel buildings next occupying 14 percent of the space. In sales, Midtown West has the 5th highest sale turnover among other neighborhoods in the city with $2.3 billion in sales volume in the last two years. For development, Midtown West is the 2nd most active neighborhood among other neighborhoods. It had 13.1 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. There was one pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of four of the 15 commercial properties representing 1,435,770 square feet of the 1,800,347 square feet. The largest owner is Paramount Group, followed by Vornado Realty Trust and then Stonehenge NYC.
On the tax block, there was one new building construction project filed totaling zero square feet. It is a 136-unit, zero-square-foot R-2 building developed by Rex Hakimian with plans filed January 12, 2022 and permitted May 31, 2022.

The majority, or 61 percent of the 1.6 million square feet of built space are hotel buildings, with elevator buildings next occupying 30 percent of the space.

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