Extell Development sells retail in Chelsea to Silvera Properties for $24.5M

UPDATED 4:21 a.m. June 15, 2023: Silvera Properties through the entity 534 West 28th Street LLC paid $24.5 million to Extell Development through the entity Clinton Pb 27 LLC for the retail building (K4) at 533 West 27th Street in Chelsea, Manhattan. The sale also included an air rights purchase, bringing the total acquisition cost to $34.5 million.
This property was part of a large portfolio Robert Gans owned that he transferred to Extell Development and Bluestone Group as part of a $200 million settlement agreement in bankruptcy court.
The deal closed on June 6, 2023 and was recorded on June 13, 2023. The property has 31,106 square feet of built space and 46,890 square feet of additional air rights for a total buildable of 78,012 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $787 and the price per buildable square foot is $314 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 Extell Development was Marc Kwestel. The signatory for Silvera Properties was David Levine. David Silvera is owner of Silvera Properties.  He also owns 156 Beekman Street in FiDi bought for $7.3 million in 2012, and 29 Leonard Street, which he bought for $24.5 million in 2018.

A Cushman & Wakefield team of Michael DeCheser, Michael Gembecki, Robert Burton, Bobby Carrozzo and Bryan Hurley were the brokers on the sale.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Silvera Properties had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Extell Development purchased 34 properties in seven transactions for a total of $1.2 billion and sold 45 properties in 43 transactions for a total of $945.1 million over the same time period. The 31,106-square-foot property generated revenue of $2 million or $65 per square foot, according to the most recent income and expense figures.

The property

The retail building in Chelsea has 31,106 square feet of built space and 46,890 square feet of additional air rights for a total buildable of 78,012 square feet according to a PincusCo analysis of city data. The parcel has frontage of 55 feet and is 197 feet deep with a total lot size of 10,374 square feet. The lot is irregular. The zoning is C6-3 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 7.52 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $11.7 million. The most recent loan totaled 0.0 and was provided by Centennial Bank on April 15, 2022.

Violations and lawsuits

The property was involved in five lawsuits and two bankruptcies over the past two years. The highest value suit was a $147.2 million judgment concerning a loan filed on January 20, 2022, by Bluestone Group against Mack Real Estate Credit Strategies. The highest value bankruptcy was filed on September 14, 2022, by Robert Gans citing assets of $200 million. In addition, according to city public data, the property has received $3,700 in OATH penalties 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 Chelsea, The bulk, or 36 percent of the 52.4 million square feet of commercial built space are office buildings, with elevator buildings next occupying 28 percent of the space. In sales, Chelsea has the 4th highest sale turnover among other neighborhoods in the city with $2.6 billion in sales volume in the last two years. For development, Chelsea has 1.8 times the average amount of major developments relative to other neighborhoods and is the 18th highest in Manhattan. It had 1.8 million square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of seven of the 14 commercial properties representing 261,223 square feet of the 410,898 square feet. The largest owner is Scharfman Organization, followed by Related Companies and then Jame Y.A. Pastreich.
On the tax block, there was one new building construction project filed totaling 148,957 square feet. It is a 40-unit, 148,957 square-foot residential (R-2) building submitted by Related Companies and filed by Gregory Gushee with plans filed July 30, 2013 and permitted February 12, 2015.

The majority, or 37 percent of the 410,898 square feet of built space are retail buildings, with elevator buildings next occupying 33 percent of the space.

The seller

The PincusCo database currently indicates that Extell Development owned at least 66 commercial properties with 793 residential units in New York City with 2,913,666 square feet and a city-determined market value of $775 million. (Market value is typically about 50% of actual value.) The portfolio has $5.4 billion in debt, with top three lenders as Guggenheim Partners, Blackstone Group, and Prudential Credit Opportunities respectively. Within the portfolio, the bulk, or 37 percent of the 2,913,666 square feet of built space are specialty properties, with elevator properties next occupying 27 percent of the space. The bulk, or 96 percent of the built space, is in Manhattan, with Brooklyn next at 4 percent of the space.

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