Lane Capital Partners, Joseph Sutton, buy $20.9M note on SoHo office building in pre-foreclosure

UPDATED 3:00 p.m., February 7, 2025: Lane Capital Partners and Joseph Sutton of Wharton Properties, through the entity LCP Soho V LLC bought a note with an original principal of $20.9 million from Shanghai Commercial Bank secured by Julie Chen, Lucia Chen, Ted Chen, and Tsing Feng Chen’s office building (O5) at 250 Lafayette Street in SoHo, Manhattan. The property is in the midst of a pre-foreclosure action, and has been subject to a bankruptcy filing.
The note sale closed on January 30, 2025 and was recorded on February 4, 2025. The prior lender was Shanghai Commercial Bank which held debt that had an original loan amount of $20.9 million.
The property has 16,766 square feet of built space according to a PincusCo analysis of city data.

According to documents in the bankruptcy case, that case was dismissed on November 14, 2024. “The Trustee filed the Motion to Dismiss premised upon continuing losses of the estate and no likelihood of rehabilitation, failure to pay post-petition taxes, failure to file operating reports, and failure to pay the Trustee’s quarterly fees. Indeed, the Debtors’ property is not producing income, the Lenders have indicated they would not support any plan of reorganization, and post-petition taxes continue to accrue. ”

According to documents filed in the ongoing pre-foreclosure case, 850013/2024, “As of January 11, 2024, the outstanding unpaid balance of the 250 Lafayette Notes will be $20,032,987.89 in principal, plus interest in the amount of $3,125,869.51.”

In a related case, for a property the borrowers own at 335 West 35th Street (index 850240/2024 in New York County Supreme Court), the court appointed a receiver on December 2024.

Prior sales and revenue

The 16,766-square-foot property generated revenue of $1.4 million or $82 per square foot, according to the most recent income and expense figures.

The property

The office building with 1 residential units in SoHo has 16,766 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 25 feet and is 126 feet deep with a total lot size of 3,292 square feet. The lot is irregular. The zoning is M1-5/R7D which allows for up to 5 times floor area ratio (FAR) for manufacturing and up to 4.2 times FAR for residential with inclusionary housing. The property is in the SoHo-Cast Iron Historic District Extension. The city-designated market value for the property in 2022 is $6.9 million.

Violations and lawsuits

The property was involved in one lawsuit and two bankruptcies over the past two years. The suit was a $20.9 million commercial foreclosure concerning a loan filed on January 17, 2024, by Shanghai Commercial Bank and Shanghai Commercial & Savings Bank against New World Art Center. The highest value bankruptcy was filed on January 5, 2024, by Julie Chen, Lucia Chen, Ted Chen, and Tsing Feng Chen citing assets of $60.6 million. In addition, according to city public data, the property has received $950 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on July 17, 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 SoHo, The bulk, or 46 percent of the 9.5 million square feet of commercial built space are office buildings, with mixed-use buildings next occupying 14 percent of the space. In sales, SoHo has 2.9 times the average sales volume among other neighborhoods with $775.4 million in sales volume in the last two years and is the 14th highest in Manhattan. For development, SoHo has had very little major development activity relative to other neighborhoods.It had 481,647 square feet of commercial and multi-family construction under development in the last two years, which represents 5 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of six of the 15 commercial properties representing 166,727 square feet of the 268,509 square feet. The largest owner is Firmdale Hotels, followed by United American Land and then Javeri Capital.
There are no active new building construction projects on this tax block.

The majority, or 48 percent of the 268,509 square feet of built space are office buildings, with hotel buildings next occupying 29 percent of the space.

Updated with the addition of Joseph Sutton as partner with Lane Capital on the note purchase.

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