ESRT pays $68M to L3 Capital, their fourth transaction in Williamsburg

Empire State Realty Trust through the entity Esrt 81-91 North 6th Street, L.L.C. paid $68 million to L3 Capital through the entity L3 Williamsburg Portfolio LLC for the three-unit mixed-use building (S3) at 85 North 6th Street in Williamsburg, Brooklyn, retail building (K2) at 81 North 6th Street in Williamsburg, Brooklyn, and retail building (K2) at 89 North 6th Street in Williamsburg, Brooklyn. The expected use is cash flowing.
The deal closed on September 25, 2024 and was recorded on October 3, 2024. The four properties have 35,380 square feet of built space and 8,500 square feet of additional air rights for a total buildable of 39,000 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $1,921 and the price per buildable square foot is $1,743 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 L3 Capital was Domenic Lanni. The signatory for Empire State Realty Trust was Thomas P. Durels. The contract date was July 3, 2024. This sale is not part of the portfolio L3 Capital acquired from RedSky Capital.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Empire State Realty Trust purchased five properties in five transactions for a total of $187.7 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 seven properties in six transactions for a total of $75.1 million over the same time period. Out of the four properties, three with a total of 35,380 square feet of built space generated revenue of $869,964 per year.

The property

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 $5 million. The most recent loan totaled $30 million and was provided by Wintrust Bank on March 6, 2024.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties for the past 24 months. In addition, according to city public data, the properties have received $2,625 in OATH penalties in the last year.

Development

For the tax lot buildings, four out of the four buildings received a initial certificate of occupancy in the last ten years. 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. There was one pre-foreclosure suit filed among other mixed-use buildings in the past 12 months.

The block

On the tax block of 85 North 6th Street, PincusCo has identified the owners of 21 of the 28 commercial properties representing 93,481 square feet of the 127,783 square feet. The largest owner is L3 Capital, followed by Maurice Setton and then Eva Lesniak.
On the tax block, there was one new building construction project filed totaling 5,391 square feet. It is a 5,391 square-foot mercantile (M) building submitted by Michael Alvandi with plans filed October 14, 2022 and permitted April 3, 2023.

The majority, or 52 percent of the 127,783 square feet of built space are mixed-use buildings, with walkup buildings next occupying 24 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 16 commercial properties with 727 residential units in New York City with 7,095,440 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 89 percent of the 7,095,440 square feet of built space are office properties, with elevator properties next occupying 10 percent of the space. They are all located in Manhattan.

Direct link to Acris document. https://a836-acris.nyc.gov/bblsearch/bblsearch.asp?borough=3&block=02326&lot=0039” target=”_blank”>link