Capstone Equities buys $41M note secured by Mitchell Holdings hotel in Penn Plaza

Capstone Equities through the entity 1921 West 31st Street Funding LLC bought a note with an original principal of $41 million from Deutsche Bank secured by Mitchell Holdings’s hotel building (H3) at 19 West 31st Street in Penn Station, Manhattan.
The deal closed on December 30, 2022 and was recorded on January 9, 2023. The prior lender was Deutsche Bank which held debt that had an original loan amount of $41 million. The property has 37,213 square feet of built space and 11,823 square feet of additional air rights for a total buildable of 49,060 square feet according to PincusCo analysis of city data.
The owner bought the property on June 3, 2016, for $40.2 million. The signatory for Mitchell Holdings was David J. Mitchell.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes David Mitchell, head officer and Geoffrey Mills, agent. The business entities are Gam Hospitality and Life Hotel One Llc.

The property

The 19 West 31st Street parcel has frontage of 50 feet and is 98 feet deep with a total lot size of 4,906 square feet. The zoning is C6-4 which allows for up to 10 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 $10.3 million.

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 one DOB violation, $3,625 in ECB penalties, and $5,125 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 neighborhood

In Penn Plaza, the majority, or 71 percent of the 21.7 million square feet of commercial built space are office buildings, with specialty buildings next occupying 8 percent of the space. In sales, Penn Plaza has had very little sales volume relative to other neighborhoods with $101.9 million in sales volume in the last two years. For development, Penn Plaza has 2 times the average amount of major developments relative to other neighborhoods and is the 12th highest in Manhattan. It had 2.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 10 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 10 of the 38 commercial properties representing 1,112,831 square feet of the 1,985,522 square feet. The largest owner is Uikun Lee, aka Ui Kun Lee and then Torkian Group.
On the tax block, there were two new building construction projects totaling 76,850 square feet. The largest is a 27-unit, 59,149-square-foot R-2 building developed by Alex Shing with plans filed June 28, 2017 and it has not been permitted yet.The second largest is a 37-unit, 17,701-square-foot R-1 building developed by Raizada Vaid with plans filed March 20, 2015 and it has not been permitted yet.

The majority, or 79 percent of the 1.7 million square feet of built space are office buildings, with retail buildings next occupying 8 percent of the space.

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