GDSNY, Corem up debt to $140M for dev site in Midtown East

Corem Property Group and GDS Development through the entity 417 Park Avenue Corporation as borrower signed a refi loan with lender Nordic Trustee & Agency valued at $140 million for two properties including the 28-unit residential elevator building at 417 Park Avenue in Midtown East, Manhattan and midblock retail building at 407 Park Avenue in Midtown East, Manhattan.

The partners plan a 220,000-square-foot office project. Yimby reported this week that demolition of the buildings that had occupied the site had concluded.

The deal closed on March 7, 2022 and was recorded on March 16, 2022. The prior lender was Nordic Trustee & Agency which held debt that had an original loan amount of $100 million.
The signatory for Corem Property Group and GDS Development was Michael Kirchmann. The signatory for Nordic Trustee & Agency was Adam Kastengren Sandberg. Corem Property Group acquired Klovern, GDSNY’s partner on the project. The owners obtained $100 million in financing in 2020 from the Swedish bond market, and have added $40 million in this new round of financing.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 417 Park Avenue.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes Alan Rudikoff, head officer and Janet Roman, officer. The business entities are Brown Harris Stevens Residential Mgmt and 417 Park Avenue Corporation.

The property

The 417 Park Avenue parcel has frontage of 75 feet and is 108 feet deep with a total lot size of 8,725 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $24.4 million. The most recent loan totaled $100 million and was provided by Klovern on 1-Jun-20. The property has a city-determined energy rating of 82 out of 100.

Violations and lawsuits

The properties were not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the properties have received two DOB violations, $1,250 in ECB penalties, and $1,500 in OATH penalties in the last year.

The neighborhood

In Midtown East, the majority, or 77 percent of the 65.7 million square feet of built space are office buildings, with residential elevator buildings next occupying 8 percent of the space. In sales, Midtown East has 4 times the average sales volume among other neighborhoods with $1.1 billion in sales volume in the last two years and is the 10th highest in Manhattan. For development, Midtown East has 4 times the average amount of major developments relative to other neighborhoods and is the 4th highest in Manhattan. It had 3.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 6 percent of the neighborhood’s built space.

The block

On the tax block of 417 Park Avenue, PincusCo has identified the owners of six of the 56 commercial properties representing 441,989 square feet of the 1,786,019 square feet. The largest owner is Deutsche Bank, followed by Rudin Management and then Sol Goldman Investments.

The majority, or 74 percent of the 1.7 million square feet of built space are office buildings, with residential elevator buildings next occupying 23 percent of the space.

Surrounding

Within a 400-foot radius of 417 Park Avenue, Pincusco identified 11 commercial real estate items of interests occurred over the past 24 months.
Of those 11 items, one was in new building development. It was a new building permit issued on November 19, 2020 for a 59,819-square-foot R-2 building with 62 residential units at 115 East 55th Street.
Of those 11 items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on September 27, 2021 for the $5 million renovation of 525,890-square-foot E building with zero residential units at 390 Park Avenue.
Of those 11 items, three were sales above $5 million totaling $671.9 million. The most recent of the three was Rybak Development which bought the 8,824-square-foot, nine-unit mixed-use building (K2) on 656 Lexington Avenue for $24.4 million from James Biagi on December 22, 2021.
Of those 11 items, six were loans above $5 million totaling $1.3 billion. The most recent of the six was Ciner Resources which borrowed $18.3 million from PNC Bank secured by the 7,616-square-foot, one-unit office building (O2) on 124 East 55th Street on January 12, 2022.

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