Empire State Realty Trust pays $18.1M to L3 Capital in second recent purchase in Williamsburg

Empire State Realty Trust through the entity Esrt 124-128 North 6th Street, L.L.C. paid $18.1 million through a real estate owned to L3 Capital through the entity Rs Jz Bedford – N 6th, LLC for the retail building (K1) at 124 North 6th Street in Williamsburg, Brooklyn. The expected use is cash flowing. This is the second transaction between the parties reported recently. In the first, ESRT paid $28.3 million for 134 North 6th Street in Williamsburg.
The deal closed on September 25, 2024 and was recorded on October 2, 2024. The property has 2,510 square feet of built space and 5,020 square feet of additional air rights for a total buildable of 7,530 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $7,206 and the price per buildable square foot is $2,402 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 seller bought the property on August 15, 2018, for $32.2 million. The signatory for L3 Capital was Domenic Lanni. The signatory for Empire State Realty Trust was Thomas P. Durels. The contract date was July 3, 2024. RedSky Capital turned over the properties to mezzanine lender L3 Capital as part of a larger transaction.  The Commercial Observer reported on the transaction yesterday.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Empire State Realty Trust purchased four properties in four transactions for a total of $169.6 million and has no record it sold any properties over the past 24 months.
The seller L3 Capital had not purchased any other properties and sold six properties in five transactions for a total of $57.1 million over the same time period.

The property

The retail building in Williamsburg has 2,510 square feet of built space and 5,020 square feet of additional air rights for a total buildable of 7,530 square feet according to a PincusCo analysis of city data. The parcel has frontage of 50 feet and is 49 feet deep with a total lot size of 2,510 square feet. The zoning is M1-2/R6A which allows for up to 2 times floor area ratio (FAR) for manufacturing and up to 3 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $1.1 million. The most recent loan totaled $122.6 million and was provided by JPMorgan Chase on December 31, 2020.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has 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 $1 million on this tax lot.

The neighborhood

In Williamsburg, The bulk, or 39 percent of the 50.4 million square feet of commercial built space are elevator buildings, with walkup buildings next occupying 25 percent of the space. In sales, Williamsburg has the 4th highest sale turnover among other neighborhoods in the city with $1.8 billion in sales volume in the last two years. For development, Williamsburg has 4.2 times the average amount of major developments relative to other neighborhoods and is the 2nd highest in Brooklyn. It had 4.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 9 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of five of the 21 commercial properties representing 17,442 square feet of the 63,789 square feet. The largest owner is L3 Capital, followed by Empire State Realty Trust.
On the tax block, there were two new building construction projects totaling 14,986 square feet. The largest is a 7,496 square-foot mercantile (M) building submitted by Domenic Lanni with plans filed July 26, 2021 and it has not been permitted yet. The second largest is a 7,490 square-foot mercantile (M) building submitted by Benjamin Stokes with plans filed September 27, 2016 and it has not been permitted yet.

The majority, or 45 percent of the 63,789 square feet of built space are mixed-use buildings, with walkup buildings next occupying 28 percent of the space.

The seller

The PincusCo database currently indicates that L3 Capital owned at least 28 commercial properties with 25 residential units in New York City with 201,031 square feet and a city-determined market value of $73.9 million. (Market value is typically about 50% of actual value.) The portfolio has $308.3 million in debt, with top three lenders as JPMorgan Chase, Ladder Capital, and Wintrust Bank respectively. Within the portfolio, the bulk, or 51 percent of the 201,031 square feet of built space are retail properties, with mixed-use properties next occupying 37 percent of the space. The bulk, or 78 percent of the built space, is in Brooklyn, with Manhattan next at 22 percent of the space.

The buyer

The PincusCo database currently indicates that Empire State Realty Trust owned at least 15 commercial properties with 727 residential units in New York City with 7,092,930 square feet and a city-determined market value of $2.2 billion. (Market value is typically about 50% of actual value.) The portfolio has $180 million in debt, borrowed from Morgan Stanley. Within the portfolio, the bulk, or 90 percent of the 7,092,930 square feet of built space are office properties, with elevator properties next occupying 10 percent of the space. They are all located in Manhattan.

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