Kahen Properties pays $3.7M for mixed-use in Gramercy, down from $7.7M

Kahen Properties through the entity Gramercy Third LLC paid $3.7 million to an affiliate of Property Markets Group through the entity 194 Third Owner LLC for the four-unit mixed-use building (S4) at 194 Third Avenue in Gramercy, Manhattan.
The deal closed on March 6, 2024 and was recorded on April 8, 2024. The property has 6,923 square feet of built space and 16,077 square feet of additional air rights for a total buildable of 23,000 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $538 and the price per buildable square foot is $162 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 December 21, 2016, for $7.7 million. The signatory for Property Markets Group was Kevin Maloney. The signatory for Kahen Properties was Majid Kahen. Property Markets Group through a company in care of Stolar Capital bought the building in December 2016 for $7.7 million.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Kahen Properties purchased three properties in three transactions for a total of $33.8 million and has no record it sold any properties over the past 24 months.
The seller Property Markets Group purchased two properties in one transaction for a total of $100 million and sold three properties in two transactions for a total of $117 million over the same time period. The former owners according to the Department of Housing Preservation and Development includes Kasra Sanandaji, head officer and Wendy Alper, officer. The business entity is 194 Third Owner Llc.

The property

The mixed-use building with 4 residential units in Gramercy has 6,923 square feet of built space and 16,077 square feet of additional air rights for a total buildable of 23,000 square feet according to a PincusCo analysis of city data. The parcel has frontage of 23 feet and is 100 feet deep with a total lot size of 2,300 square feet. The zoning is C1-9A which allows for up to 2 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 $4.5 million.

Violations and lawsuits

The property was involved in two lawsuits and zero bankruptcies over the past two years. The highest value suit was a $4 million money judgment concerning a contract filed on September 27, 2023, by Stolar Capital against Majid Kahen and Kahen Properties. In addition, according to city public data, the property has received five DOB violations and one housing violation 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 Gramercy, the bulk, or 31 percent of the 11.3 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 24 percent of the space. In sales, Gramercy has 1.4 times the average sales volume among other neighborhoods with $393.3 million in sales volume in the last two years and is the 23rd highest in Manhattan. For development, Gramercy has had very little major development activity relative to other neighborhoods.It had 921,971 square feet of commercial and multi-family construction under development in the last two years, which represents 8 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of six of the 17 commercial properties representing 569,981 square feet of the 892,192 square feet. The largest owner is SL Green Realty, followed by Scharfman Organization and then Marriott International.
There are no active new building construction projects on this tax block.

The majority, or 36 percent of the 892,192 square feet of built space are elevator buildings, with office buildings next occupying 32 percent of the space.

The seller

The PincusCo database currently indicates that Property Markets Group owned at least nine commercial properties with four residential units in New York City with 42,229 square feet.The portfolio has $544.5 million in debt, with top three lenders as AIG, Maxim Capital Group, and Goldman Sachs respectively. Within the portfolio, the bulk, or 48 percent of the 42,229 square feet of built space are industrial properties, with A4 properties next occupying 33 percent of the space. The bulk, or 67 percent of the built space, is in Brooklyn, with Manhattan next at 33 percent of the space.

The buyer

The PincusCo database currently indicates that Kahen Properties owned at least 11 commercial properties with 317 residential units in New York City with 303,128 square feet and a city-determined market value of $60.3 million. (Market value is typically about 50% of actual value.) The portfolio has $118.5 million in debt, with top three lenders as TD Bank, Signature Bank, and Santander Bank respectively. Within the portfolio, the bulk, or 62 percent of the 303,128 square feet of built space are elevator properties, with walkup properties next occupying 29 percent of the space. The bulk, or 47 percent of the built space, is in Manhattan, with Queens next at 34 percent of the space.

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