Hersha Hospitality signs $51M refi with Monarch Alternative Capital in Midtown East

Hersha Hospitality Trust through the entity 44 Lexington Associates, LLC as borrower signed a refi loan with lender Monarch Alternative Capital through the entity MFI Icav valued at $51 million for two commercial condo units, hotel and retail, in the hotel building at 517 Lexington Avenue in Midtown East, Manhattan.

The deal closed on August 30, 2023 and was recorded on September 7, 2023. The prior lender was Mack Real Estate Group which held debt that had an original loan amount of $65 million. The two properties have 67,316 square feet of built space according to a PincusCo analysis of city data. The loan price per built square foot is $757 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 Hersha Hospitality Trust was David Desfor. The signatory for Monarch Alternative Capital was Adam Sklar.

The property

The hotel condo in Midtown East has 67,316 square feet of built space according to a PincusCo analysis of city data. The parcel has a total lot size of 63,668 square feet. The city-designated market value for the property in 2022 is $19.8 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties for the past 24 months. In addition, according to city public data, the properties have not received any significant violations in the last year.

Development

For the tax lot buildings, one out of the two buildings received a initial certificate of occupancy in the last ten years. 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 East, The majority, or 81 percent of the 62.6 million square feet of commercial built space are office buildings, with hotel buildings next occupying 7 percent of the space. In sales, Midtown East has the 2nd highest sale turnover among other neighborhoods in the city with $3.5 billion in sales volume in the last two years. For development, Midtown East is the 2nd most active neighborhood among other neighborhoods. It had 16.9 million square feet of commercial and multi-family construction under development in the last two years, which represents 27 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On the tax block of 517 Lexington Avenue, PincusCo has identified the owners of two of the four commercial properties representing 849,868 square feet of the 2,379,169 square feet. The two identified owners are Varde Partners and Constellation Hotels Holding Limited.
There are no active new building construction projects on this tax block.

The majority, or 64 percent of the 2.4 million square feet of built space are office buildings, with hotel buildings next occupying 36 percent of the space.

The borrower

The PincusCo database currently indicates that Hersha Hospitality Trust owned at least four commercial properties in New York City with 259,155 square feet and a city-determined market value of $107.4 million. (Market value is typically about 50% of actual value.) The portfolio has $131.8 million in debt, borrowed from Citibank. Within the portfolio, all identified are hotel properties. The bulk, or 71 percent of the built space, is in Manhattan, with Queens next at 29 percent of the space.

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