Marx Development Group signs $195M refi loan with Rialto Capital for hotel in Hudson Yards

Marx Development Group through the entity 34-10 Development LLC as borrower signed a refi loan with lender Rialto Capital through the entity Fs Creit Originator LLC valued at $195 million for the hotel building at 461-469 West 34th Street in Hudson Yards, Manhattan.
The deal closed on April 28, 2022 and was recorded on May 12, 2022. The prior lender was Mack Real Estate Group which held debt that had an original loan amount of $201.5 million. The property has 218,640 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $891 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 owner bought the property on April 13, 2007, for $16 million. The signatory for Marx Development Group was David Marx. The signatory for Rialto Capital was Sorana Georgescu.

The property

The 461-469 West 34th Street parcel has frontage of 104 feet and is 98 feet deep with a total lot size of 10,286 square feet. The zoning is C6-4 which allows for up to 10 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 $67.2 million.The most recent loan totaled $201.5 million and was provided by Mack Real Estate Group on August 15, 2019.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received four DOB violations and $2,245 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on October 28, 2019. On these lots, there is one active new building construction project for a 399-unit, 197,714-square-foot R-1 building. The project was developed by David Marx with plans filed October 30, 2013 and permitted May 9, 2016.

The neighborhood

In Hudson Yards, the majority, or 74 percent of the 46.4 million square feet of commercial built space are office buildings, with specialty buildings next occupying 12 percent of the space. In sales, Hudson Yards has 3.9 times the average sales volume among other neighborhoods with $1.1 billion in sales volume in the last two years and is the 11th highest in Manhattan. For development, Hudson Yards is the 4th most active neighborhood among other neighborhoods. It had 6 million square feet of commercial and multi-family construction under development in the last two years, which represents 13 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the 12 commercial properties representing 808,611 square feet of the 978,189 square feet. The largest owner is Baupost Group, followed by Marx Development Group and then TF Cornerstone. There are two active new building construction projects totaling 245,978 square feet. The largest is a 399-unit, 197,714-square-foot R-1 building developed by David Marx with plans filed October 30, 2013 and permitted May 9, 2016. The second largest is a 148-unit, 48,264-square-foot R-1 building developed by Amnon Shalhov with plans filed October 30, 2013 and permitted October 6, 2014.

The majority, or 42 percent of the 1.2 million square feet of built space are office buildings, with residential elevator buildings next occupying 25 percent of the space.

The borrower

The PincusCo database currently indicates that Marx Development Group owned at least seven commercial properties with 588,909 square feet and a city-determined market value of $133.9 million. (Market value is typically about 50% of actual value.) The portfolio has $538.4 million in debt, with top three lenders as Mack Real Estate Group, Capital Funding Group, and Fundamental Advisors respectively. Within the portfolio, the bulk, or 52 percent of the 588,909 square feet of built space are hotel properties, with specialty properties next occupying 48 percent of the space. The bulk, or 43 percent of the built space, is in Queens, with Manhattan next at 37 percent of the space.

Surrounding

Within a 400-foot radius of 461-469 West 34th Street, PincusCo identified six commercial real estate items of interests occurred over the past 24 months.
Of those six items, one was in new building development. It was a new building permit issued on May 18, 2020 for a 414,314-square-foot R-2 building with 526 residential units at 451 10th Avenue.
Of those six items, one was for major renovation including a certificate of occupancy change. It was a permit issued on March 11, 2021 for the $3 million renovation of 490,727-square-foot B building with N/A residential units at 460 West 34th Street.
One of those six items was a sale which 601W Companies bought the 538,520-square-foot, 50-unit office building (O6) on 460 West 34th Street for $809.9 million from Walter & Samuels on January 14, 2021.
Of those six items, three were loans above $5 million totaling $2 billion. The most recent of the three was Tishman Speyer which borrowed $866.4 million from Blackstone Group secured by the 2,216,567-square-foot, one-unit office building (O4) on 527 West 34th Street on November 23, 2021.

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