Barone Management puts LIC office building listed for $31.5M in bankruptcy

Scott Barone on behalf of Barone Management’s affiliate DMFYD LIC LLC, which owns the 86,360-square-foot office building at 9-03 44th Road in Long Island City, Queens, filed a chapter 11 bankruptcy petition in the Eastern District of New York yesterday, listing creditors Columbia Pacific Advisors, Metropolitan Commercial Bank and the city’s Industrial Development Agency.
The Commercial Observer reported in April 2021 that Columbia Pacific Advisors and Metropolitan Commercial Bank provided $32 million in financing for the then-newly constructed building. At the time, Metropolitan Commercial Bank recorded a $17 million loan, and in a separate document Columbia Pacific Advisors memorialized a $16 million preferred equity stake.

Case 1-24-44740-jmm LINK
Chapter 11 (pdf link)

RIPCO Real Estate has marketed the property for sale, with an asking price of $31.5 million (pdf link) with an asking price of $31.5 million. A filing with the city indicates a total cost of $31.2 million.

PincusCo did not identify any court filings indicating a foreclosure sale was imminent.

Barone Management signed a 99-year ground lease in 2014 with the fee owners of the property, John and Michael Koullias, and that year filed plans for a 199-unit hotel. Then in 2017, the firm structured a lease deal with the New York City Industrial Development Agency, borrowed $23.77 million from Whitestar Advisors, and filed plans for the new office building.

The city explains the lease deal like this: the Koullias family leases the property to Barone Management which will operate the building and lease it to the city’s Industrial Development Agency for sublease by the Agency to Barone Management for subsequent sub-sublease to various industrial, light manufacturing and office tenants.

Barone Management submitted a new building construction project for a 84,599 square-foot business (B) building at 9-03 44th Road in Long Island City, Queens. The plan was filed with the New York City Department of Buildings on July 27, 2017 under job number 421533629 and was permitted on August 24, 2018. It calls for the construction of a three-story building. It received its initial certificate of occupancy on March 29, 2021.

The property

The office building in Long Island City has 86,360 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 211 feet and is 211 feet deep with a total lot size of 42,300 square feet. The lot is irregular. The zoning is M1-4 which allows for up to 2 times floor area ratio (FAR) for manufacturing. The city-designated market value for the property in 2022 is $11.7 million. The most recent loan totaled $17 million and was provided by Metropolitan Commercial Bank on April 21, 2021.

Prior sales and revenue

The 86,360-square-foot property generated revenue of $2.9 million or $33 per square foot, according to the most recent income and expense figures.

Violations and lawsuits

According to city public data, the property has received two DOB violations and $410 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 Long Island City, The bulk, or 32 percent of the 60.1 million square feet of commercial built space are industrial buildings, with elevator buildings next occupying 31 percent of the space. In sales, Long Island City has the 6th highest sale turnover among other neighborhoods in the city with $1.1 billion in sales volume in the last two years. For development, Long Island City is the 8th most active neighborhood among other neighborhoods. It had 5.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 9 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other development buildings in the past 12 months.

The owner

The PincusCo database currently indicates that Barone Management owned at least nine commercial properties with 11 residential units in New York City with 280,093 square feet and a city-determined market value of $36.1 million. (Market value is typically about 50% of actual value.) The portfolio has $109.2 million in debt, with top three lenders as Metropolitan Commercial Bank, Berkshire Group, and Low Income Investment Fund respectively. Within the portfolio, the bulk, or 41 percent of the 280,093 square feet of built space are specialty properties, with office properties next occupying 36 percent of the space. The bulk, or 73 percent of the built space, is in Queens, with Bronx next at 24 percent of the space.

The surrounding

Within a 400-foot radius of 44-19 9 Street, PincusCo identified two commercial real estate items of interests occurred over the past 24 months. One of those two items was a sale which Bayrock Capital bought the 49,001-square-foot, one-unit hotel (H3) on 44-21 9th Street for $24 million from Mandy Lema, Xiaodong Zhao, and Joseph Huang on October 31, 2023. One of those two items was a loan which Bayrock Capital borrowed $17.6 million from Levon Capital secured by the 49,001-square-foot, one-unit hotel (H3) on 44-21 9th Street on October 31, 2023.

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