Goldman Sachs sells $105M stake at cancer treatment center in East Harlem

UPDATED, 6:35 p.m., October 9, 2024: The entity MM Proton I Holdco, LLC, in care of Massachusetts-based Murphy & McManus, acquired an interest from Goldman Sachs through the entity Special Situations Investing Group II, LLC valued at $105 million for the cancer treatment building (I9) at 225 East 126th Street in East Harlem, Manhattan.
The deal closed on August 20, 2024 and was recorded on October 8, 2024. The property has 139,333 square feet of built space and 244,084 square feet of additional air rights for a total buildable of 383,196 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $753 and the price per buildable square foot is $274 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 developer bought the property on July 15, 2015, for $14 million. New York Proton Center is a partnership between  multiple hospitals, Memorial Sloan Kettering Cancer Center, Montefiore Health System, and Mount Sinai Health System.

The “project facility is managed by Murphy & McManus, a Boston-based developer of healthcare and life science facilities.”

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer New York Proton Center had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Goldman Sachs purchased two properties in two transactions for a total of $440 million and sold four properties in two transactions for a total of $174.5 million over the same time period.

The property

The specialty building in East Harlem has 139,333 square feet of built space and 244,084 square feet of additional air rights for a total buildable of 383,196 square feet according to a PincusCo analysis of city data. The parcel has frontage of 255 feet and is 199 feet deep with a total lot size of 50,957 square feet. The zoning is C6-3 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 7.52 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $115.6 million. The most recent loan totaled $150 million and was provided by Nomura Holdings on May 29, 2024.

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 received five DOB violations and $125 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on December 20, 2018. 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 East Harlem, The majority, or 51 percent of the 52.4 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 21 percent of the space. In sales, East Harlem has 1.4 times the average sales volume among other neighborhoods with $351.3 million in sales volume in the last two years and is the 23rd highest in Manhattan. For development, East Harlem has 2.1 times the average amount of major developments relative to other neighborhoods and is the 15th highest in Manhattan. It had 2.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 4 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the five commercial properties representing 139,333 square feet of the 153,583 square feet. The two identified owners are New York Proton Center and Nyc Department Of Housing Preservation And Development.
There are no active new building construction projects on this tax block.

The majority, or 91 percent of the 153,583 square feet of built space are specialty buildings, with industrial buildings next occupying 9 percent of the space.

The seller

The PincusCo database currently indicates that Goldman Sachs owned at least five commercial properties with 1,381 residential units in New York City with 2,865,416 square feet and a city-determined market value of $751.6 million. (Market value is typically about 50% of actual value.) The portfolio has $57 million in debt, borrowed from USAA Real Estate. Within the portfolio, the bulk, or 75 percent of the 2,865,416 square feet of built space are office properties, with elevator properties next occupying 24 percent of the space. The bulk, or 76 percent of the built space, is in Manhattan, with Queens next at 19 percent of the space.

The buyer

The PincusCo database currently indicates that New York Proton Center owned at least one commercial property in New York City with 139,333 square feet and a city-determined market value of $115.6 million. (Market value is typically about 50% of actual value.) The portfolio has $536.4 million in debt, borrowed from JPMorgan Chase and Nomura Holdings. The portfolio consists of at least a single specialty property. It is located in Manhattan.

Correction: a prior version of this post incorrectly identified the buyer of this stake as the consortium of hospitals including Memorial Sloan Kettering Cancer Center, Montefiore Health System, and Mount Sinai Health System. In fact, a spokesperson said they were not involved in this transaction.

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