Cove acquires ground sublease valued at $57.6M from Hornig at 178K Hudson Yards dev site

Cove Property Group through the entity CPB Hudson Ninth Avenue Owner LLC acquired a ground sublease valued at $57.6 million from Hornig Capital Partners through the entity Ninth Avenue Ground LLC for control of three properties including the six-unit residential walkup building (C4) at 415 9th Avenue in Hudson Yards, Manhattan, the six-unit mixed-use building (S5) at 413 9th Avenue in Hudson Yards, Manhattan, and three-unit mixed-use building (S3) at 419 9th Avenue in Hudson Yards, Manhattan.
This transaction is Cove buying out the sub-sublandlord position that Hornig acquired in 2020, which PincusCo reported at the time. The sublandlord position is subordinate to the fee owned by the Kissling famialy with Suzanne Kissling as signatory, which signed a 150-year lease with their tenant, an entity called RGS Ninth Avenue Realty LLC, whose signatory was Randy Modell of ABS Real Estate Partners. Cove bought the lease that Hornig signed in 2020 as tenant to RGS Ninth Avenue Realty LLC.

The deal closed on July 7, 2022 and was recorded on July 18, 2022. The four properties have 11,732 square feet of built space and 67,268 square feet of additional air rights for a total buildable of 79,000 square feet according to PincusCo analysis of city data. The sale price per built square foot is $4,909 and the price per buildable square foot is $729 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 signatory for Hornig Capital Partners was Daren Hornig. The signatory for Cove Property Group was Kevin Hoo.

PincusCo first reported in April 2022 that Cove was planning a 178,000-square-foot tower .  The Real Deal later reported in April that a deal for the property was in the works.

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 415 9th Avenue.

The property

The 415 9th Avenue parcel has frontage of 39 feet and is 100 feet deep with a total lot size of 3,950 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 $5.5 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 not received any significant violations 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 block

On the tax block of 415 9th Avenue, PincusCo has identified the owners of six of the 13 commercial properties representing 550,252 square feet of the 699,084 square feet. The largest owner is SL Green Realty, followed by Cove Property Group and then RGS Ninth Avenue Realty LLC. There are two active new building construction projects totaling 60,927 square feet. The largest is a 12-unit, 12,817-square-foot J-2 building developed by James Papaionnou with plans filed November 7, 2007 and permitted February 18, 2016. The second largest is a 24-unit, 48,110-square-foot R-2 building developed by Andrew Lynn with plans filed September 17, 2015 and permitted November 23, 2015.

The majority, or 78 percent of the 699,084 square feet of built space are office buildings, with elevator buildings next occupying 19 percent of the space.

The seller

The PincusCo database currently indicates that Hornig Capital Partners owned at least one commercial property in New York City with 1,180 square feet and a city-determined market value of $919,800. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single mixed-use property. It is located in Manhattan.

The buyer

The PincusCo database currently indicates that Cove Property Group owned at least two commercial properties in New York City with 522,174 square feet and a city-determined market value of $201.5 million. (Market value is typically about 50% of actual value.) The portfolio has $405.1 million in debt, borrowed from Blackstone Group. Within the portfolio, the bulk, or 99 percent of the 522,174 square feet of built space are office properties, with walkup properties next occupying 1 percent of the space. They are all located in Manhattan.

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