Black Spruce, Orbach pay $193.7M to Solow, part of $1.8B deal

Black Spruce Management and Orbach Affordable Housing Solutions through the entity 1 Sutton Place N LLC paid $193.7 million to Solow Realty & Development through the entity 60th Street Development Ii LLC for the 234-unit residential elevator building (D8) at 420-434 East 61st Street in Lenox Hill, Manhattan.
The deal closed on November 23, 2022 and was recorded on December 8, 2022. The property has 307,000 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $631 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)
The signatory for Solow Realty & Development was Steven Weymouth. The signatory for Black Spruce Management and Orbach Affordable Housing Solutions was Joshua Gotlib. Along with the sale, Gotlib and Orbach assumed a $110 million loan originated by Walker & Dunlop and then securitized as 2020-K740 and replaced the late Sheldon Solow as the guarantors.

This sale is part of a $1.8 billion deal between Solow led by Stefan Soloviev and Black Spruce and Orbach.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Black Spruce Management purchased 21 properties in 16 transactions for a total of $1.1 billion and has no record it sold any properties over the past 24 months.
The seller Solow Realty & Development had not purchased any other properties and sold six properties in three transactions for a total of $1 billion over the same time period. The former owners according to the Department of Housing Preservation and Development includes Anthony Calicchio, head officer and Geovanni Bernardino, site manager. The business entity is 60th Street Development Ii, Llc. The 307,000-square-foot property generated revenue of $14 million or $46 per square foot, according to the most recent income and expense figures.

The property

The 420-434 East 61st St parcel has frontage of 200 feet and is 200 feet deep with a total lot size of 35,904 square feet. The lot is irregular. The zoning is C6-3 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 7.52 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $65.3 million.The most recent loan totaled $110.1 million and was provided by Walker & Dunlop on August 31, 2020.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received $2,000 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The block

On this tax block, PincusCo has identified the owners of two of the six commercial properties representing 400,139 square feet of the 775,481 square feet. The two identified owners are Solow Realty & Development and Gazit Horizons.
There are no active new building construction projects on this tax block.

The majority, or 87 percent of the 681,034 square feet of built space are elevator buildings, with office buildings next occupying 7 percent of the space.

The seller

The PincusCo database currently indicates that Solow Realty & Development owned at least five commercial properties in New York City with 2,735,474 square feet and a city-determined market value of $1.4 billion. (Market value is typically about 50% of actual value.) The portfolio has $319.4 million in debt, borrowed from Walker & Dunlop. Within the portfolio, the bulk, or 63 percent of the 2,735,474 square feet of built space are office properties, with elevator properties next occupying 37 percent of the space. They are all located in Manhattan.

The buyer

The PincusCo database currently indicates that Black Spruce Management owned at least 145 commercial properties in New York City with 4,313,737 square feet and a city-determined market value of $918 million. (Market value is typically about 50% of actual value.) The portfolio has $434.7 million in debt, with top three lenders as Signature Bank, Amerant Bank, and New York Community Bank respectively. Within the portfolio, the bulk, or 71 percent of the 4,313,737 square feet of built space are elevator properties, with walkup properties next occupying 28 percent of the space. The bulk, or 85 percent of the built space, is in Manhattan, with Queens next at 12 percent of the space.
The PincusCo database currently indicates that Orbach Affordable Housing Solutions owned at least three commercial properties in New York City with 882,297 square feet and a city-determined market value of $204.6 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 98 percent of the 882,297 square feet of built space are elevator properties, with industrial properties next occupying 2 percent of the space. They are all located in Manhattan.

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