Fortress Investment buys $1B loan portfolio from Capital One, bank’s second big portfolio sale

400 8th Avenue (Credit - Google)

400 8th Avenue (Credit - Google)

Fortress Investment Group bought a $1 billion loan portfolio from Capital One secured by office buildings including those owned by Himmel + Meringoff Properties and Bernstein Real Estate. This is at least the second large commercial loan portfolio sale by Capital One. The earlier one was in September 2021, when Capital One sold a loan portfolio with at least $1.3 billion of debt to PIMCO, as PincusCo first reported.

The Commercial Observer was the first to report last week that Fortress Investment Group had purchased the approximately $1 billion office loan portfolio from Capital One.

City records disclosed two of the loan purchases. In the larger, Fortress Investment Group through the entity CF One LLC, bought a note with an original principal of $27 million from Capital One secured by Himmel + Meringoff Properties’ office building (O3) at 400 8th Avenue in Chelsea, Manhattan.
The deal closed on August 15, 2023 and was recorded on August 18, 2023. The prior lender was Capital One which held debt that had an original loan amount of $27 million.The property has 76,637 square feet of built space according to a PincusCo analysis of city data.

In the smaller deal, Fortress Investment Group through the entity CF One, LLC, bought a note with an original principal of $3 million from Capital One secured by Bernstein Real Estate’s mixed-use building (K9) at 140-142 West 30th Street in Chelsea, Manhattan.

The signatory for Himmel + Meringoff Properties was Steven J. Meringoff.  PincusCo first reported in 2021 that PIMCO bought a large New York City loan portfolio ultimately totaling more than $1.3 billion. from Capital One on September 28, 2021. At the time PincusCo had records for about $334 million in loans, but ultimately at least 263 loans with original principal of at least $1.3 billion in loans were transferred on September 28, 2021, and subsequently recorded between October 2021 and May 2022.

The property

The office building in Chelsea has 76,637 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 83 feet and is 100 feet deep with a total lot size of 8,365 square feet. The zoning is C6-3X 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 $27.2 million. The most recent loan totaled $27 million and was provided by Capital One on December 8, 2021.

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 received $4,960 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 6th highest sale turnover among other neighborhoods in the city with $2.5 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 1.9 million square feet of commercial and multi-family construction under development in the last two years, which represents 4 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 12 of the 32 commercial properties representing 563,120 square feet of the 1,351,585 square feet. The largest owner is Yan Zou, followed by Son Dinh Tran and then Solil Management.
On the tax block, there was one new building construction project filed totaling 79,008 square feet. It is a 95-unit, 79,008 square-foot residential (R-2) building submitted by Ironstate Development and filed by Michael Barry with plans filed January 2, 2014 and permitted August 6, 2014.

The majority, or 80 percent of the 1.4 million square feet of built space are office buildings, with elevator buildings next occupying 16 percent of the space.

The borrower

The PincusCo database currently indicates that Himmel + Meringoff Properties owned at least three commercial properties in New York City with 314,707 square feet and a city-determined market value of $87.4 million. (Market value is typically about 50% of actual value.) The portfolio has $222.3 million in debt, with top three lenders as Aareal Capital, Signature Bank, and Capital One respectively. Within the portfolio, all identified are office properties. They are all located in Manhattan.

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