Chetrit, Stellar sign $539.5M first mortgage loan with Bank of Montreal for UES rentals

The Chetrit Group and Stellar Management through the entity Cf E 86 LLC as borrower signed a first mortgage loan with lender Bank of Montreal valued at $539.5 million for two residential elevator properties including the 692-unit residential elevator building at 305-315 East 86th Street in Yorkville, Manhattan and 149-unit residential elevator building at 16O East 88th Street in Carnegie Hill, Manhattan.
This financing is part of a financing package with a total value of $714 million. The Real Deal first reported the deal. Henry Bodek of Galaxy Capital brokered the deal, according to the report.
The deal closed on May 12, 2022 and was recorded on May 27, 2022.The two properties have 818,835 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $658 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 305-315 East 86th Street.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes Laurence Gluck, head officer and Jacob Chetrit, officer. The business entities are Jumeaux Management and Sm E 86 Llc & Lsg E 86 Llc Cf E 86 Llc. The two properties with a total of 818,835 square feet of built space generated revenue of $41.2 million per year or $50 per square foot.

The property

The 305-315 East 86th Street parcel has frontage of 201 feet and is 320 feet deep with a total lot size of 62,965 square feet. The lot is irregular. The zoning is C2-8A which allows for up to 2 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 $171.5 million.
The 16O East 88th Street parcel has frontage of 137 feet and is 100 feet deep with a total lot size of 13,877 square feet. The zoning is C1-8X which allows for up to 2 times floor area ratio (FAR) for commercial and up to 9 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $26.6 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties since September of 2020. In addition, according to city public data, the properties have received two DOB violations, 11 housing violations, and $1,760 in OATH penalties in the last year.

The neighborhood

In Yorkville, the majority, or 71 percent of the 43.2 million square feet of commercial built space are residential elevator buildings, with residential walkup buildings next occupying 17 percent of the space. In sales, Yorkville has 1.4 times the average sales volume among other neighborhoods with $398.1 million in sales volume in the last two years and is the 23rd highest in Manhattan. For development, Yorkville has 1.7 times the average amount of major developments relative to other neighborhoods and is the 13th highest in Manhattan. It had 1.5 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 the tax block of 305-315 East 86th Street, PincusCo has identified the owners of four of the 17 commercial properties representing 746,940 square feet of the 863,538 square feet. The largest owner is Stellar Management, followed by 355 East 86Th Street Lp and then Dominique Punnett. There are no active new building construction projects on this tax block.

The majority, or 88 percent of the 1 million square feet of built space are residential elevator buildings, with residential walkup buildings next occupying 8 percent of the space.

Surrounding

Within a 400-foot radius of 305-315 East 86th Street, PincusCo identified seven commercial real estate items of interests occurred over the past 24 months.
Of those seven items, two were in new building development. There were one new building permit application and one new building permit. The most recent of these two items was a filing on January 13, 2022 for a 96,543-square-foot R-2 building with 51 residential units at 1695 Second Avenue.
Of those seven items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on November 8, 2021 for the $807,778 renovation of 39,634-square-foot RES building with 34 residential units at 355 East 86th Street.
Of those seven items, four were loans above $5 million totaling $159.2 million. The most recent of the four was Kenbar Management which borrowed $9 million from JPMorgan Chase secured by the 62,990-square-foot, 68-unit rental (D6) on 336 East 86th Street on February 23, 2022.

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