Blackstone files $65M pre-foreclosure at Chetrit’s Garment District office building

Blackstone Group through the entity SIG CRE 2023 Venture LLC filed a $65 million pre-foreclosure at Chetrit Group’s Garment District office building at 404 Fifth Avenue, an individual city landmark at the corner of 37th Street. The complaint, filed yesterday in New York State Supreme Court in Manhattan, alleges the loan is in default.
Court filings represent the position of one party and are not necessarily accurate or complete.

Case LINK

according to the complaint, “Borrower failed to comply with the terms, covenants and conditions of the Loan Documents by failing to make payments when due commencing on October 1, 2024, and all payments due thereafter. As such, an Event of Default exists…” The complaint also alleges a maturity default, since it was not paid off on December 31, 2024.

“As a result of the foregoing, there is now due and owing under the Loan Documents an amount of no less than: (i) $60,294,784.65 for the outstanding principal balance of the Loan; plus (ii) all accrued interest, default interest, late charges and any other amounts due and owing under the Loan Documents…”

The complaint identifies Meyer Chetrit and Judah Chetrit as signatories to guarantees.
The Chetrit Group borrowed $65 million from Signature Bank in 2016. Blackstone Group acquired the loan after Signature was declared insolvent.

The property

The office building in Garment District has 83,278 square feet of built space and 16,342 square feet of additional air rights for a total buildable of 99,650 square feet according to a PincusCo analysis of city data. The parcel has frontage of 65 feet and is 141 feet deep with a total lot size of 9,965 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The property is in the Individual Landmark. The city-designated market value for the property in 2022 is $27.9 million.

Prior sales and revenue

The 83,278-square-foot property generated revenue of $4.9 million or $59 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, $2,430 in ECB penalties, and $10,560 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 Garment District, The majority, or 69 percent of the 52.3 million square feet of commercial built space are office buildings, with hotel buildings next occupying 13 percent of the space. In sales, Garment District has the 7th highest sale turnover among other neighborhoods in the city with $1.2 billion in sales volume in the last two years. For development, Garment District is the 5th most active neighborhood among other neighborhoods. It had 8.4 million square feet of commercial and multi-family construction under development in the last two years, which represents 16 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 10 of the 29 commercial properties representing 974,225 square feet of the 1,676,094 square feet. The largest owner is Angelina Lee, followed by Chandrakant Patel and then Edward Song. On the tax block, there was one new building construction project filed totaling 46,824 square feet. It is a 143-unit, 46,824 square-foot hotel/dormitory/shelter (R-1) building submitted by Richard Fung with plans filed December 4, 2014 and permitted March 9, 2017.

The surrounding

Within a 400-foot radius of 402 5 Avenue, PincusCo identified eight commercial real estate items of interests occurred over the past 24 months. Of those eight items, one was for major renovation including a certificate of occupancy change. It was a permit issued on February 1, 2023 for the $7.2 million renovation of 429,570-square-foot business (B) building with zero residential units at 420 Fifth Avenue. Of those eight items, four were sales above $5 million totaling $95.3 million. The most recent of the four was Edward Song which bought the 80,500-square-foot, 19-unit office building (O6) on 15 West 36th Street for $21.5 million from Walter & Samuels on December 2, 2024. Of those eight items, three were loans above $5 million totaling $159.8 million. The most recent of the three was Jay Suites in which borrowed $19 million from Citibank secured by the 112,120-square-foot, 33-unit office building (O6) on 8 West 38th Street on August 7, 2024.

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