GDS, Sabal acquire Midtown West office tower Mitsubishi lost to Aareal, valued at $82.6M

GDS Development and Sabal Investment Holdings through the entity Apex Owner NY LLC acquired an interest valued at $82.6M in the office condominium unit at 142 West 57th Street in Midtown West, Manhattan. The former owner of the property was Mitsubishi Corporation which owned it through a BentallGreenOak fund in a joint venture with L&L Holding Company, through the entity Go-Ll Met Tower JV LLC. Aareal Capital, the former lender, acquired control from Mitsubishi before selling it to GDS and Sabal.

The deal closed on March 19, 2024 and was recorded on March 26, 2024. The condo unit has 237,695 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $347 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 February 22, 2016, for $163 million. This is an entity level acquisition. Traded NY reported the buyers as GDS Development and Sabal Investment Holdings, the sale price at $92.5 million, and identified the brokers as Newmark’s Dustin Stolly, Jordan Roeschlaub, Adam Spies, Christopher Kramer, Adam Doneger, and Evan Layne.

The Real Deal reported in April 2023 that Newmark was marketing the defaulted $92.5 million loan that Aareal Capital provided in 2021.

In February 2016, Mitsubishi bought a controlling stake in the office condo from L&L Holding and BlackRock. Mitsubishi made the purchase through a GreenOak Real Estate fund. GreenOak merged with with Bentall Kennedy to form BentallGreenOak.

BlackRock bought its stake in 2006 in a deal valued at $170 million from prior owner, Principal Global Investors.

GDS Development on March 7, 2024, bought the note with a reduced principal of $80 million (original principal of $92.5 million from 2021), and then on March 19, 2024, GDS took control through an entity level transaction.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer GDS Development had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Mitsubishi Corporation had not purchased any other properties and had not sold any properties over the same time period.

The property

The office condo in Midtown West has 237,695 square feet of built space according to a PincusCo analysis of city data. The parcel has a total lot size of 237,695 square feet. The city-designated market value for the property in 2022 is $98.2 million. The most recent loan totaled $92.5 million and was provided by Aareal Capital on March 25, 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 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 Midtown West, The majority, or 75 percent of the 75.9 million square feet of commercial built space are office buildings, with hotel buildings next occupying 14 percent of the space. In sales, Midtown West has the 3rd highest sale turnover among other neighborhoods in the city with $2.7 billion in sales volume in the last two years. For development, Midtown West is the most active neighborhood among other neighborhoods. It had 21.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 28 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of two of the 14 commercial properties representing 116,075 square feet of the 1,597,985 square feet. The two identified owners are Hasan Biberaj and Feil Organization.
There are no active new building construction projects on this tax block.

The majority, or 49 percent of the 1.6 million square feet of built space are hotel buildings, with office buildings next occupying 47 percent of the space.

The buyer

The PincusCo database currently indicates that GDS Development owned at least three commercial properties in New York City with 356,155 square feet and a city-determined market value of $76.7 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 75 percent of the 356,155 square feet of built space are office properties, with V1 properties next occupying 25 percent of the space. They are all located in Manhattan.

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