Blackstone files $15M pre-foreclosure at Lightstone Group retail in Garment District Moxy

The Blackstone Group through the entity SIG CRE 2023 Venture LLC filed a $15.2 million pre-foreclosure action alleging the loan provided to Lightstone Group through its 485 Retail Parcels LLC and secured by two retail condominium units with a total of 3,846 square feet at the base of the Moxy hotel at 485 Seventh Avenue in the Garment District, was in default. The lender filed the case yesterday in State Supreme Court in Manhattan.
Case LINK
The Lightstone Group bought the hotel in November 19, 2014 from the Eretz Group for $182 million, then in December 2015 divided the building into four commercial condos, one for the hotel, two retail condos and one garage condo. This case is related to the loan on the retail condos only. The Lightstone Group has a $262.2 million loan from Goldman Sachs for the hotel portion, which is not party to this case.

Lightstone Group said the retail was impacted by the general decline in store space valuations in recent years, and it was seeking to restructure the debt, as other borrowers are doing.

“Values of retail real estate in Manhattan have been decimated in recent years, and that has impacted the loan on these two storefront retail spaces. We are in discussions with the lender for a restructuring of this debt, and we are optimistic that we will reach a satisfactory result for all stakeholders,” a spokesperson said in a statement.

The Lightstone Group, led by David Lichtenstein, has large holdings in hotels and other properties in New York City and elsewhere.

Signature Bank originated the $15.2 million loan March 29, 2018, which equated to $3,952 per square foot for the 3,846 square feet.
According to the complaint the lender alleges the loan is in default because the, “Borrower failed to make payment of principal and interest due October 10, 2023, as well as all payments due thereafter.”

The property

The condo building in Garment District has 272,725 square feet of built space according to a PincusCo analysis of city data. PincusCo cannot determine the lot area of the 489 7 Avenue parcel at this time.

Development

For the tax lot building, it received its initial certificate of occupancy on September 20, 2017.

Violations and lawsuits

According to city public data, the property has received one DOB violation and $2,450 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 51.8 million square feet of commercial built space are office buildings, with hotel buildings next occupying 12 percent of the space. In sales, Garment District has near average sales volume among other neighborhoods with $532 million in sales volume in the last two years and is the 16th highest in Manhattan. For development, Garment District is the 5th most active neighborhood among other neighborhoods. It had 7.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 14 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of seven of the 17 commercial properties representing 831,948 square feet of the 1,583,624 square feet. The largest owner is Elo Organization, followed by Empire State Realty Trust and then Invesco Real Estate. On the tax block, there were two new building construction projects totaling 413,120 square feet. The largest is a 300-unit, 368,790 square-foot residential (R-2) building submitted by Sioni Group and filed by Jack Yadidi with plans filed December 15, 2021 and permitted January 9, 2024. The second largest is a 122-unit, 44,330 square-foot hotel/dormitory/shelter (R-1) building submitted by Dreygo Development and filed by Chris O’Connor with plans filed October 19, 2013 and permitted April 3, 2015.

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