Cottonwood Group signs $28M refi with Walnut Hill Capital for development site near Penn Station

Cottonwood Group through the entity 5th Ave Gateway Land, LLC as borrower signed a refi loan with lender Walnut Hill Capital through the entity Three Harbor Partners, LLC valued at $28 million for the vacant lot at 316 Fifth Avenue in Penn Station, Manhattan.

The deal closed on March 25, 2022 and was recorded on March 31, 2022. The prior lender was Celona Asset Management which held debt that had an original loan amount of $26 million.

The property has zero square feet of built space and 49,380 square feet of additional air rights for a total buildable of 49,380 square feet according to PincusCo analysis of city data.

According to The Real Deal, Cottonwood Group is planning on developing a 40-story tower with 27 luxury condominium units. Those plans were filed in 2017.

The price per buildable square foot is $567 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.)

The owner bought the property on May 12, 2016, for $19.3 million. The signatory for Cottonwood Group was Hon K. Shing. The signatory for Walnut Hill Capital was Albert Hwang.

The property

The 316 5th Avenue parcel has frontage of 49 feet and is 100 feet deep with a total lot size of 4,938 square feet. The zoning is C5-2 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 $1.6 million.The most recent loan totaled $26 million and was provided by Celona Asset Management on June 30, 2020.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has not received any significant violations in the last year.

Development

On these lots, there is one active new building construction project for a 27-unit, 59,149-square-foot R-2 building. The project was developed by Alex Shing with plans filed June 28, 2017 and it has not been permitted yet.

The neighborhood

In Penn Station, the majority, or 68 percent of the 22.9 million square feet of commercial built space are office buildings, with residential elevator buildings next occupying 11 percent of the space. In sales, Penn Station has near average sales volume among other neighborhoods with $315.7 million in sales volume in the last two years and is the 28th highest in Manhattan. For development, Penn Station has 2.6 times the average amount of major developments relative to other neighborhoods and is the 7th highest in Manhattan. It had 2.4 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 nine of the 38 commercial properties representing 1,049,352 square feet of the 1,985,522 square feet. The largest owner is Global Holdings Group, followed by Torkian Group and then Ui Kun Lee. There are two active 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 77 percent of the 1.8 million square feet of built space are office buildings, with retail buildings next occupying 8 percent of the space.

Surrounding

Within a 400-foot radius of 316 5th Avenue, Pincusco identified nine commercial real estate items of interests occurred over the past 24 months.
Of those nine items, one was for major renovation including a certificate of occupancy change. It was a permit issued on September 24, 2020 for the $10.4 million renovation of 526,540-square-foot B building with N/A residential units at 295 Fifth Avenue.
One of those nine items was a sale which Republic Investment Company bought the 64,577-square-foot, four-unit hotel (H3) on 17 West 32nd Street for $56.5 million from Apple Core Hotels on August 19, 2019.
Of those nine items, seven were loans above $5 million totaling $439 million. The most recent of the seven was Gene JiYoon Park, Yook S. Park, and Pinnacle Group which borrowed $18 million from New York Community Bank secured by the 39,740-square-foot, 77-unit rental (D3) on 9 East 32nd Street on February 25, 2022.

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