GFI Capital ups debt to $59M with Rialto Capital Management for hotel in Boerum Hill

GFI Capital Resources Group through the entity Bond Street Lessee LLC as borrower signed a refi loan with lender Rialto Capital Management through the entity Rref Iv- D Direct Lending Investment, LLC valued at $59 million for the corner hotel building at 61 Bond Street in Boerum Hill, Brooklyn.
The deal closed on April 15, 2022 and was recorded on May 5, 2022. The prior lender was BH3 Management which held debt that had an original loan amount of $35.8 million. The property has 165,534 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $356 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 GFI Capital Resources Group was Ilya Braz. The signatory for Rialto Capital Management was Liat Heller. Allan Gross’s GFI obtained $23 million in a gap loan on the ground leased property. Safehold bought the fee from GFI for $45 million.

The property

The 61 Bond Street parcel has frontage of 35 feet and is 84 feet deep with a total lot size of 18,170 square feet. The lot is irregular. The zoning is C6-1 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 3.44 times FAR for residential. The city-designated market value for the property in 2022 is $62.8 million.The most recent loan totaled $35.8 million and was provided by iStar on February 1, 2021.

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 received three DOB violations and $4,350 in OATH penalties in the last year.

Development

On these lots, there is one active new building construction project for a 285-unit, 154,947-square-foot R-1 building. The project was developed by Eric Bass with plans filed June 24, 2014 and permitted November 1, 2016.

The neighborhood

In Boerum Hill, the bulk, or 25 percent of the 13 million square feet of commercial built space are residential elevator buildings, with 1-4 family buildings next occupying 24 percent of the space. In sales, Boerum Hill has had very little sales volume relative to other neighborhoods with $226.2 million in sales volume in the last two years. For development, Boerum Hill has had very little major development activity relative to other neighborhoods.It had 438,190 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 four of the 20 commercial properties representing 208,784 square feet of the 571,112 square feet. The largest owner is iStar, followed by City of New York and then Icon Realty Management.

The majority, or 57 percent of the 483,249 square feet of built space are hotel buildings, with specialty buildings next occupying 23 percent of the space.

The borrower

The PincusCo database currently indicates that GFI Capital Resources Group owned at least five commercial properties with 223,699 square feet and a city-determined market value of $91.7 million. (Market value is typically about 50% of actual value.) The portfolio has $332.7 million in debt, with top three lenders as AIG, Bank OZK, and Investors Bank respectively. Within the portfolio, the bulk, or 83 percent of the 223,699 square feet of built space are hotel properties, with residential elevator properties next occupying 14 percent of the space. They are all located in Manhattan.

Surrounding

Within a 400-foot radius of 61 Bond Street, PincusCo identified three commercial real estate items of interests occurred over the past 24 months.
Of those three items, one was for major renovation including a certificate of occupancy change. It was an initial temporary certificate of occupancy issued on June 25, 2020 for the $800,000 renovation of zero-square-foot R-3 building with one residential units at 398 State Street.
One of those three items was a sale which Tair Yakubov bought the 14,500-square-foot, 14-unit rental (C7) on 397 Atlantic Avenue for $9.2 million from Piscione Family, Battaglia Family, Michael Marino, and Ralph Shalom on March 2, 2022.
One of those three items was a loan which Second Development Services borrowed $23 million from Ares Management secured by one condo unit in the 34,050-square-foot, two-unit office building (RB) on 285 Schermerhorn Street on April 26, 2022.

Direct link to Acris document. link