Black Spruce, Orbach pay $402.6M to Solow Realty for 332-unit rental in Lenox Hill

Black Spruce Management and Orbach Affordable Housing Solutions through the entity 265 East 66th Hamilton LLC paid $402.6 million to Solow Realty & Development through the entity Townhouse Company II, L.L.C. for the 322-unit residential elevator building (D6) at 1261 Second Avenue in Lenox Hill, Manhattan.
The deal closed on April 20, 2023 and was recorded on May 1, 2023. The property has 490,652 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $820 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. The buyers, who also use the name GO Partners, acquired the property in a tenant-in-common structure with the entity 265 East 66th Street LLC holding 66.4315% and 254 East 66th Hamilton LLC holding 33.5685%. Joshua Gotlib signed for both entities. They assumed $148.8 million existing debt which had been packaged into the security, Series 2020-K739, and according to The Real Deal the buyers also obtained $90 million in preferred equity from the Children’s Investment Fund, which is not recorded and was arranged by Adam Spies and Adam Doneger of Newmark.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Black Spruce Management purchased 13 properties in 11 transactions for a total of $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 nine properties in six transactions for a total of $1.2 billion over the same time period. The former owners according to the Department of Housing Preservation and Development includes Anthony Calicchio, head officer and Nelson Genao, site manager. The business entity is Townhouse Company II, Llc. The 490,652-square-foot property generated revenue of $27.8 million or $57 per square foot, according to the most recent income and expense figures.

The property

The residential elevator building with 322 residential units in Lenox Hill has 490,652 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 200 feet and is 300 feet deep with a total lot size of 40,167 square feet. The lot is irregular. The zoning is C2-8 which allows for up to 2 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 $137.8 million. The most recent loan totaled $148.8 million and was provided by Walker & Dunlop on August 31, 2020.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has received two DOB violations and $3,200 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 $1 million on this tax lot.

The block

On this tax block, PincusCo has identified the owners of four of the four commercial properties representing 699,824 square feet of the 699,824 square feet. The largest owner is Zucker Organization, followed by Solow Realty & Development and then M. Melnick & Co., Inc..
There are no active new building construction projects on this tax block.

The majority, or 94 percent of the 699,824 square feet of built space are elevator buildings, with walkup buildings next occupying 6 percent of the space.

The seller

The PincusCo database currently indicates that Solow Realty & Development owned at least four commercial properties with 501 residential units in New York City with 2,391,233 square feet. The portfolio has $209.3 million in debt, borrowed from Walker & Dunlop. Within the portfolio, the bulk, or 71 percent of the 2,391,233 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 buyer

The PincusCo database currently indicates that Black Spruce Management owned at least 146 commercial properties with 4,600 residential units in New York City with 4,577,316 square feet. 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 72 percent of the 4,577,316 square feet of built space are elevator properties, with walkup properties next occupying 27 percent of the space. The bulk, or 87 percent of the built space, is in Manhattan, with Queens next at 10 percent of the space.
The PincusCo database currently indicates that Orbach Affordable Housing Solutions owned at least four commercial properties with 857 residential units in New York City with 1,189,297 square feet. Within the portfolio, the bulk, or 99 percent of the 1,189,297 square feet of built space are elevator properties, with industrial properties next occupying 1 percent of the space. They are all located in Manhattan.

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