Chelsea developers sue to block looming UCC auction at “$80M” building

Erno Bodek, Lazzar Bodek and Rachel Bodek, who own the Frame building at 541 West 21st Street, in Chelsea, are seeking an emergency order blocking a July 10 UCC auction by the mezzanine lender SME Capital Ventures that is allegedly “commercially unreasonable.” The Bodeks claim the building is worth $80 million.

SME which provided a $4.75 million mezzanine loan that court filings say has been in default since September 2022. G4 Capital provided a $50.4 million construction loan.

Erno Bodek filed a bankruptcy petition in February 2023 23-10210-lgb to block a looming UCC sale that month, and the auction was stayed, but in June the bankruptcy judge lifted the stay to allow the UCC foreclosure to go through, set for July 10, as The Real Deal reported at the time.

Through an attorney, the Bodeks claim they have a deal with a nonprofit that has signed a letter of intent to house immigrants in the building, and will lease the property for $10.15 million per year plus taxes, but despite a request from lender’s attorney, the Bodeks attorney did not disclose the name of the nonprofit, provide the LOI or provide other verification of the LOI. No new permit applications have been filed at the building since 2021, according to a PincusCo review of created date in DOB.

The property

The industrial building in Chelsea has 65,307 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 75 feet and is 98 feet deep with a total lot size of 7,466 square feet. The zoning is M1-5 which allows for up to 5 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $21 million. The most recent loan totaled $56 million and was provided by G4 Capital Partners on August 23, 2019.

Violations and lawsuits

According to city public data, the property has received seven DOB violations, $10,000 in ECB penalties, and $11,000 in OATH penalties in the last year.

The property was involved in zero lawsuits and one bankruptcy over the past two years. The bankruptcy was filed on February 13, 2023, by Erno Bodek citing assets of $80 million.

The neighborhood

In Chelsea, The bulk, or 36 percent of the 52.4 million square feet of commercial built space are office buildings, with elevator buildings next occupying 28 percent of the space. In sales, Chelsea has the 5th highest sale turnover among other neighborhoods in the city with $2.4 billion in sales volume in the last two years. For development, Chelsea has near average amount of major developments among other neighborhoods and is the 18th highest in Manhattan. It had 2 million square feet of commercial and multi-family construction under development in the last two years, which represents 4 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of six of the 14 commercial properties representing 197,948 square feet of the 347,360 square feet. The largest owner is Albanese Organization, followed by Erno Bodek and then Gottesman Family. On the tax block, there was one new building construction project filed totaling 64,543 square feet. It is a 10-unit, 64,543 square-foot residential (R-2) building submitted by Brantwood Capital and filed by Dan Harrington with plans filed April 7, 2016 and permitted December 23, 2019.

The owner

The PincusCo database currently indicates that Erno Bodek owned at least one commercial property in New York City with 65,307 square feet and a city-determined market value of $21 million. (Market value is typically about 50% of actual value.) The portfolio has $56 million in debt, borrowed from G4 Capital Partners. The portfolio consists of at least a single industrial property. It is located in Manhattan.

The surrounding

Within a 400-foot radius of 545 West 21 Street, PincusCo identified 11 commercial real estate items of interests occurred over the past 24 months. Of those 11 items, eight were sales above $5 million totaling $276.6 million. The most recent of the eight was Jeffrey Zukerman, As Trustee which bought the 0-square-foot, one-unit condo building (R4) on 555 West 22nd Street for $17.9 million from 22nd And 11th Associates, L.L.C. on November 7, 2022. Of those 11 items, three were loans above $5 million totaling $1.7 billion. The most recent of the three was Albanese Organization in which borrowed $20 million from Dime Community Bank secured by the 29,600-square-foot, one-unit office building (O7) on 154 11th Avenue on November 17, 2022.

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