LoanCore acquires $196M Lenox Hill office building through foreclosure from prior owner Dune

Former lender LoanCore Capital through the entity 110 E 60 Street Holdings LLC acquired through a foreclosure auction from former borrower Dune Real Estate Partners the office building (O3) at 111 East 59th Street in Lenox Hill, Manhattan. The former original principal of the debt on the building was $196 million. The deed transfer value was just $5 million.
The transfer closed on September 28, 2023 and was recorded on October 12, 2023. The property has 170,511 square feet of built space according to a PincusCo analysis of city data.

The seller bought the property on July 17, 2015, for $170 million. The signatory for the court selling the Dune Real Estate Partners’s asset was the referee Haley Greenberg. The signatory for LoanCore Capital was Tyler Shea. The contract date was September 20, 2023.

A New York State Supreme Court judge ordered the sale of the retail and office building owned by Dune Real Estate Partners at 111 East 59th Street in Midtown East, in Manhattan, five months after lender LoanCore Capital filed an action to foreclose on the loan with an initial principal of $196 million. Case [850195/2022]

Dune Real Estate Partners along with partners Princeton International Property and Empire Capital Holdings bought the building in 2015 for $170 million with financing from Deutsche Bank. Two years later, in 2017 LoanCore refinanced that loan with a total of $196 million which included construction financing totaling $42 million. In the October pre-foreclosure action, LoanCore alleged the current outstanding debt is $193.4 million.

Empire Capital and Princeton International Property sold their stakes in 2018, according to people familiar with those transactions said, and are no longer involved with the property.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer LoanCore Capital had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Dune Real Estate Partners had not purchased any other properties and had not sold any properties over the same time period. The 170,511-square-foot property generated revenue of $16 million or $94 per square foot, according to the most recent income and expense figures.

The property

The office building in Lenox Hill has 170,511 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 60 feet and is 200 feet deep with a total lot size of 12,050 square feet. The lot is irregular. The zoning is C5-2.5 which allows for up to 12 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $81.4 million.

Violations and lawsuits

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $193.4 million commercial foreclosure concerning a loan filed on October 4, 2022, by LoanCore Capital against Dune Real Estate Partners. In addition, according to city public data, the property has received $2,000 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial rehab certificate of occupancy on July 2, 2018. On the lot, there is one active major alteration construction project for a 170,511 square-foot E building. The project was submitted by David Tawfik with plans filed November 12, 2015 and permitted January 31, 2017.

The neighborhood

In Lenox Hill, The bulk, or 35 percent of the 52 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 28 percent of the space. In sales, Lenox Hill has the highest sale turnover among other neighborhoods in the city with $4.5 billion in sales volume in the last two years. For development, Lenox Hill has 3.7 times the average amount of major developments relative to other neighborhoods and is the 6th highest in Manhattan. It had 3.8 million square feet of commercial and multi-family construction under development in the last two years, which represents 7 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the seven commercial properties representing 234,844 square feet of the 1,637,086 square feet. The largest owner is Sol Goldman Investments, followed by Joonoh Park and then Glorious Sun Group.
There are no active new building construction projects on this tax block.

The majority, or 52 percent of the 1.6 million square feet of built space are retail buildings, with office buildings next occupying 47 percent of the space.

The seller

The PincusCo database currently indicates that Dune Real Estate Partners owned at least five commercial properties in New York City with 0.0 square feet and a city-determined market value of $7.9 million. (Market value is typically about 50% of actual value.) The portfolio has $65 million in debt, borrowed from JPMorgan Chase. Within the portfolio, the bulk, or 0 percent of the 0.0 square feet of built space are V1 properties, with development properties next occupying 0 percent of the space.

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