East End Capital signs $79.6M refi with Fortress in Lower East Side

East End Capital through the entity EEGP 139 Owner, LLC as borrower signed a refi loan with lender Fortress Investment Group through the entity Fortress Credit Corp. valued at $79.6 million for the midblock specialty building at 139 East Houston Street in the Lower East Side, Manhattan.
The deal closed on March 22, 2022 and was recorded on April 8, 2022. The prior lender was Pacific Western Bank which held debt that had an original loan amount of $48 million.

East End plans a 68,000-square-foot office building.
The owner bought the property on May 17, 2017, for $31.5 million. The signatory for East End Capital was Jonathan K. Yormak. The signatory for Fortress Investment Group was David N. Brooks. This is a $79.6 million refi with a $19 million gap loan and $12.3 million from a building and project loan. Brooks is general counsel at Fortress.

The property

The 139 East Houston Street parcel has frontage of 78 feet and is 100 feet deep with a total lot size of 7,384 square feet. The lot is irregular. The zoning is C6-2A which allows for up to 6 times floor area ratio (FAR) for commercial and up to 6.02 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $1.6 million.

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 received $4,870 in ECB penalties in the last year.

Development

On these lots, there is one active major alteration construction project for a 44,610-square-foot office (B) building. The project was developed by Marc Gitto, a former managing director with East End, with plans filed March 28, 2018 and permitted July 30, 2019.

The neighborhood

In Lower East Side, the majority, or 60 percent of the 33.2 million square feet of commercial built space are residential elevator buildings, with residential walkup buildings next occupying 15 percent of the space. In sales, Lower East Side has 2.5 times the average sales volume among other neighborhoods with $677.8 million in sales volume in the last two years and is the 18th highest in Manhattan. For development, Lower East Side has 2.4 times the average amount of major developments relative to other neighborhoods and is the 9th highest in Manhattan. It had 2.2 million square feet of commercial and multi-family construction under development in the last two years, which represents 7 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the 14 commercial properties representing 85,506 square feet of the 187,605 square feet. The two identified owners are City of New York and David Sohaye. There are no active new building construction projects on this tax block.

the majority, or 45 percent of the 227,211 square feet of built space are specialty buildings, with residential walkup buildings next occupying 22 percent of the space.

The borrower

The PincusCo database currently indicates that East End Capital owned at least two commercial properties with 126,533 square feet and a city-determined market value of $11.8 million. (Market value is typically about 50% of actual value.) The portfolio has $34 million in debt, borrowed from Calmwater Capital. Within the portfolio, all identified are industrial properties. They are all located in Queens.

Surrounding

Within a 400-foot radius of 139 East Houston Street, PincusCo identified three commercial real estate items of interests occurred over the past 24 months.
Of those three items, three were loans above $5 million totaling $39.2 million. The most recent of the three was Big Apple Properties which borrowed $14 million from New York Community Bank secured by the 6,794-square-foot, 21-unit rental (C5) on 31 East 1st Street and three other properties on March 31, 2022.

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