Cheskel Schwimmer has $33.2M contract to buy Hell’s Kitchen dev site from Extell, Tabaks

Developer Cheskel Schwimmer of Chess Builders signed a $33.2 million contract to buy a development site at 616 11th Avenue in Hell’s Kitchen with about 148,064 square feet of development rights through a bankruptcy process. The debtor is Robert Gans and his creditors are a joint venture including Gary Barnett’s Extell Development, Eli Tabak’s Bluestone Group and Joseph Tabak’s Princeton Real Estate Partners. The property has alternate addresses including 555 West 45th Street.

The contract was disclosed in bankruptcy records (open pdf) for property investor Gans, the lumber yard owner who also operated strip clubs on the West Side of Manhattan. He filed to place his real estate assets into bankruptcy in June 2022 (22-10888-mg) as his debt holders, Extell Development, Bluestone Group and Princeton Real Estate Partners, pressured him through a foreclosure process initiated by prior lender Mack Real Estate Group.

Schwimmer initially signed a contract on December 21, 2023, to buy the western portion of the tax lot, fronting 11th Avenue for $18.35 million (outlined in yellow below). Then on February 15, 2024, he signed a contract for the entire, irregularly shaped parcel, for a total of $33.2 million. The sale is set to close by March 21, according to the filing.

The broker was Meridian Capital Group according to the contract, and the individual agent was Helen Hwang, according to a source.

The parcel has been part of a long string of litigation. In 2018, Mack Real Estate Group provided $130.2 million of senior financing (which was later reduced to $116 million) and Bluestone provided a $17.76 million mezzanine loan that “almost immediately went into default,” according to court filings. The initial maturity date for the mezzanine loan was October 1, 2020.

Then in October 2021, Mack filed to foreclose on the loan secured by 11 properties including 533 West 27th Street, 175 Spring Street, 616-624 11th Avenue, 610 West 46th Street, 616-620 West 46th Street, 603 West 45th Street, 613-615 11th Avenue, 617 11th Avenue and 623 11th Avenue.

In September 2022 Gans and the creditors signed a $200 million agreement to settle the litigation, but he defaulted and now the properties that the parties are not retaining are being sold.

Extell intends to develop the largest development parcel in the portfolio covering half of a city block, which is directly across the street from 616 11th Avenue on the west side of 11th Avenue.

Several of the Gans properties have sold, including  533 West 27th Street.

The property

The industrial building at 616 11th Avenue in Hell’s Kitchen has 14,460 square feet of built space and 148,064 square feet of additional air rights for a total buildable of 162,654 square feet according to a PincusCo analysis of city data. The parcel has two buildings with frontage of 119 feet and is 200 feet deep with a total lot size of 27,019 square feet. The lot is irregular. The zoning is R8 which allows for up to 6.02 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $3.9 million.

The neighborhood

In Hell’s Kitchen, The bulk, or 39 percent of the 40.6 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 18 percent of the space. In sales, Hell’s Kitchen has near average sales volume among other neighborhoods with $816.9 million in sales volume in the last two years and is the 13th highest in Manhattan. For development, Hell’s Kitchen is the 8th most active neighborhood among other neighborhoods. It had 5.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 13 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the 21 commercial properties representing 39,772 square feet of the 238,400 square feet. The largest owner is Extell, Princeton and Bluestone, followed by Danny Rebibo and then J&L Holding. There are no active new building construction projects on this tax block.

The owner

The PincusCo database currently indicates that Extell Development owned at least 67 commercial properties with 773 residential units in New York City with 2,830,410 square feet. The portfolio has $5.9 billion in debt, with top three lenders as Guggenheim Partners, Blackstone Group, and Prudential Credit Opportunities respectively. Within the portfolio, the bulk, or 38 percent of the 2,830,410 square feet of built space are specialty properties, with elevator properties next occupying 28 percent of the space. The bulk, or 96 percent of the built space, is in Manhattan, with Brooklyn next at 4 percent of the space.

The surrounding

This is the first commercial real estate event of interest identified within the 400-foot radius of 624 11 Avenue in the past 24 months.

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