Fortress Investment signs $39.7M acquisition loan with MetLife for 90-unit rental in Lenox Hill

Fortress Investment Group through the entity Crefma1 231 East 76th Owner LLC as borrower signed an acquisition loan with lender MetLife through the entity Metlife Commercial Mortgage Originator, LLC valued at $39.7 million for the 90-unit residential elevator building (D3) at 231-233 East 76th Street in Lenox Hill, Manhattan.
The deal closed on May 26, 2022 and was recorded on July 1, 2022. The prior lender was Capital One which held debt that had an original loan amount of $21 million. The property has 82,065 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $483 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 owner bought the property on May 26, 2022, for $49.1 million. The signatory for Fortress Investment Group was David Scheible. The signatory for MetLife was David Politano. There is $9.3 million in construction funding.

Prior sales and revenue

The 82,065-square-foot property generated revenue of $3.2 million or $39 per square foot, according to the most recent income and expense figures.

The property

The 231-233 East 76th Street parcel has frontage of 130 feet and is 102 feet deep with a total lot size of 13,281 square feet. The zoning is R8B which allows for up to 4 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $16.5 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. 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 $5 million on this tax lot.

The neighborhood

In Lenox Hill, the majority, or 59 percent of the 87.3 million square feet of commercial built space are residential elevator buildings, with specialty buildings next occupying 18 percent of the space. In sales, Lenox Hill has the highest sale turnover among other neighborhoods in the city with $2.9 billion in sales volume in the last two years. For development, Lenox Hill has had very little major development activity relative to other neighborhoods.It had 712,255 square feet of commercial and multi-family construction under development in the last two years, which represents 0.82 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of seven of the 30 commercial properties representing 64,270 square feet of the 360,767 square feet. The largest owner is Parkoff Organization, followed by Palin Enterprises and then Ted Cannavo. There are no active new building construction projects on this tax block.

The majority, or 69 percent of the 515,234 square feet of built space are residential elevator buildings, with residential walkup buildings next occupying 22 percent of the space.

The borrower

The PincusCo database currently indicates that Fortress Investment Group owned at least two commercial properties with 133,403 square feet and a city-determined market value of $29.1 million. (Market value is typically about 50% of actual value.) Within the portfolio, all identified are elevator properties. They are all located in Manhattan.

Surrounding

Within a 400-foot radius of 231-233 East 76th Street, Pincusco identified seven commercial real estate items of interests occurred over the past 24 months.
Of those seven items, two were sales above $5 million totaling $72.6 million. The most recent of the two was Naftali Group which bought the 11,430-square-foot, 17-unit rental (C7) on 251 East 77th Street for $9 million from Sky Management on January 12, 2022.
Of those seven items, five were loans above $5 million totaling $86.1 million. The most recent of the five was Eastmore Owners Corp. which borrowed $16 million from Investors Bank secured by one condo unit in the 238,741-square-foot, 296-unit mixed-use building (RM) on 240 East 76th Street on February 23, 2022.

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