Mack says Chetrit owes $18.5M for loan at stalled Hudson Yards hotel project

Mack Real Estate Group says Meyer Chetrit of the Chetrit Group owes the lender $18.5 million because of a payment guaranty related to a mezzanine loan at the stalled Hudson Yards, twin-towered hotel project at 545 West 37th Street.

The Commercial Observer reported in February 2023 that an $85 million loan package was being marketed for sale, composed of $53.7 million in senior debt and $31.3 million in mezzanine loans.

Court filings represent the position of one party and are not necessarily accurate or complete. Mack Real Estate Group and Chetrit Group are both large real estate firms. Mack Real Estate Group is a frequent lender and Chetrit Group is one of the city’s more active real estate owners and developers.

The PincusCo database currently indicates that Chetrit Group owned at least 38 commercial properties with 4,663,881 square feet, 2,315 residential units and a city-determined market value of $877.7 million. (Market value is typically about 50% of actual value.) The portfolio has $1.7 billion in debt, with top three lenders as Bank of Montreal, Starwood Mortgage Capital, and G4 Capital Partners respectively. Within the portfolio, the bulk, or 49 percent of the 4,663,881 square feet of built space are elevator properties, with office properties next occupying 27 percent of the space. The bulk, or 70 percent of the built space, is in Manhattan, with Queens next at 26 percent of the space.

The project has been on the drawing board for more than 12 years. On September 28, 2012, Chetrit Group through the entity paid $26.5 million for the site and in July 2015 paid $11.7 million for additional air rights.

In 2016, the Chetrit Group submitted a new building construction project for a 131-unit, 373,275 square-foot hotel (R-1) building. The plan was filed with the New York City Department of Buildings on September 30, 2016 under job number 122906506. It called for the construction of a 46-story building. The city issued a “partial” approval on March 17, 2022, but has not issued permits.

According to the complaint, “Defendant’s indebtedness under a Mezzanine Limited Payment Guaranty (the “Payment Guaranty”) in Plaintiff’s favor: (a) in the principal sum of $18,500,000, together with interest thereon at the prejudgment (9%) statutory rate from January 6, 2023… On or about December 21, 2018, Panoramic Hudson Mezz LLC, as borrower (“Borrower”), entered into a Mezzanine Loan and Security Agreement (the “Original Loan Agreement”) with CMTG Lender 34 LLC… , relating to a mezzanine loan to Borrower in the original principal amount of up to $31,300,000.”

Violations and lawsuits

According to city public data, the property has received one DOB violation, $6,685 in ECB penalties, and $10,085 in OATH penalties in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

The neighborhood

In Hudson Yards, The majority, or 59 percent of the 16.8 million square feet of commercial built space are office buildings, with elevator buildings next occupying 22 percent of the space. In sales, Hudson Yards has near average sales volume among other neighborhoods with $90.6 million in sales volume in the last two years and is the 36th highest in Manhattan. For development, Hudson Yards has near average amount of major developments among other neighborhoods and is the 19th highest in Manhattan. It had 1.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 10 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of two of the nine commercial properties representing 812,254 square feet of the 874,697 square feet. The two identified owners are Kuafu Properties and TF Cornerstone. On the tax block, there were two new building construction projects totaling 747,875 square feet. The largest is a 400-unit, 374,600 square-foot residential (R-2) building submitted by Sumaida + Khurana and filed by Saif Sumaida with plans filed September 19, 2014 and it has not been permitted yet. The second largest is a 131-unit, 373,275 square-foot hotel/dormitory/shelter (R-1) building submitted by Chetrit Group and filed by Meyer Chetrit with plans filed September 30, 2016 and permitted December 1, 2021.

The surrounding

Within a 400-foot radius of 543 West 37 Street, PincusCo identified three commercial real estate items of interests occurred over the past 24 months. Of those three items, three were loans above $5 million totaling $426.1 million. The most recent of the three was Marx Development Group in which borrowed $44.2 million from Madison Realty Capital secured by the 270,400-square-foot, three-unit hotel (H2) on 450 11th Avenue on March 6, 2024.

Direct link to the property’s ACRIS page and link to DOB NOW portal.