Lone Star Funds buys $8.5M note secured by late Serge Hoyda’s LES retail

Lone Star Funds through the entity Lsref7 Size, LLC bought a note with an original principal of $8.5 million from Flagstar Bank secured by Serge Hoyda’s 9,774-square-foot retail condo at 190 Allen Street, the adjacent retail building (K1) at 196 Allen Street, and the adjacent retail building (K1) at 184 Allen Street, all in the Lower East Side, Manhattan.
The deal closed on February 26, 2025 and was recorded on March 25, 2025. The prior lender was Flagstar Bank which held debt that had an original loan amount of $8.5 million.

The three properties have 12,713 square feet of built space and 8,817 square feet of additional air rights according to a PincusCo analysis of city data.
The signatory for Serge Hoyda for a loan modification was Serge Hoyda. Serge Hoyda died earlier this year, The Real Deal reported in February.

According to a loan 2023 modification, as of April 1, 2023, the borrower owes $8,510,933.66 in principal. From April 1, 2023 through March 31, 2024, the interest rate is fixed at 4.00% per annum, with monthly interest-only payments of $28,369.78 due on the first of each month beginning May 1, 2023. If the loan is paid off in full during this fixed-rate period, the borrower must pay an additional 1% exit fee based on the outstanding principal at the time of payoff. Beginning April 1, 2024, and continuing through December 31, 2027, the loan enters an adjustable-rate period.

In November 2024, Lone Star Funds bought three loans from Deutsche Bank with a combined original principal of just over $162 million that are secured by three A&E Real Estate Holdings rental buildings in Queens.

Prior sales and revenue

Out of the three properties, two with a total of 12,713 square feet of built space generated revenue of $372,820 per year.

The property

The retail properties have 12,713 square feet of built space and 8,817 square feet of additional air rights according to a PincusCo analysis of city data. 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 received $2,000 in OATH penalties in the last year.

Development

For the tax lot buildings, one out of the three 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 Lower East Side, The majority, or 51 percent of the 23.8 million square feet of commercial built space are elevator buildings, with walkup buildings next occupying 21 percent of the space. In sales, Lower East Side has had very little sales volume relative to other neighborhoods with $227.6 million in sales volume in the last two years. For development, Lower East Side has had very little major development activity relative to other neighborhoods.It had 623,086 square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space. There were three pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On the tax block of 190 Allen Street, PincusCo has identified the owners of eight of the 23 commercial properties representing 180,988 square feet of the 323,685 square feet. The largest owner is New York City Housing Authority, followed by Serge Hoyda and then David Zarin.
There are no active new building construction projects on this tax block.

The majority, or 45 percent of the 323,685 square feet of built space are elevator buildings, with walkup buildings next occupying 39 percent of the space.

The borrower

The PincusCo database currently indicates that Serge Hoyda owned at least four commercial properties with 12 residential units in New York City with 18,356 square feet and a city-determined market value of $6.2 million. (Market value is typically about 50% of actual value.) The portfolio has $17.5 million in debt, borrowed from Flagstar Bank. Within the portfolio, the bulk, or 81 percent of the 18,356 square feet of built space are mixed-use properties, with retail properties next occupying 19 percent of the space. They are all located in Manhattan.

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