Maverick takes control of Chetrit’s Garment District hotel, valued at $104.5M

Maverick Real Estate Partners acquired control of the Chetrit Group‘s 300-key hotel project at 255 West 34th Street in the Garment District, Manhattan. For tax purposes the transfer was valued at $104.5 million.

Maverick acquired the controlling position through the entity Penn Hotel Junior LLC while Chetrit Group turned it over through the entity JCMC West 34 Mezz II LLC.
Maverick bought the defaulted $110 million construction loan in May 2022 and sued to enforce the construction contract on the property in January 2023.  The original loan was signed in January 2020, just before the pandemic halted construction, and battered the hotel industry. The now due on the debt was $106.4 million, according to the January complaint, which was not a pre-foreclosure action, it is suit to enforce a contract.

The transfer of control closed on January 31, 2023 and was recorded on March 2, 2023. The Chetrit Group bought the property on December 17, 2015, for $20 million.

The Chetrit Group is one of the city’s largest property owners, with vast multifamily and commercial holdings. The PincusCo database currently indicates that Chetrit Group owned at least 34 commercial properties with 4,598,424 square feet, 2,288 residential units. The portfolio has $1.7 billion in debt, with top three lenders as Starwood Mortgage Capital and the Bank of Montreal. Within the portfolio, the bulk, or 49 percent of the 4,598,424 square feet of built space are elevator properties, with office properties next occupying 28 percent of the space. The bulk, or 69 percent of the built space, is in Manhattan, with Queens next at 26 percent of the space.

The January 2023 complaint alleged the developer had not completed the project, was not continuing to fund it and had several defaults on the loans including accruing mechanic’s liens and a maturity default.
Maverick Real Estate Partners, which bought the a senior loan, a senior mezzanine loan and a junior mezzanine loan totaling $110,516,429 from Arbor Realty Trust in May 2022, filed this action seeking to compel Meyer Chetrit and the Chetrit Group, which own the property, to pay for and finish the construction of the project, or alternately, to pay $106.4 million determined to be the “project completion amount.”

The property

The parcel has frontage of 79 feet and is 98 feet deep with a total lot size of 7,883 square feet. The city-designated market value for the property in 2022 is $8.2 million.

Violations and lawsuits

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $106.4 million money judgment concerning a loan filed on January 9, 2023, by Maverick Real Estate Partners against Meyer Chetrit and Chetrit Group. In addition, according to city public data, the property has received five DOB violations, $32,500 in ECB penalties, and $33,700 in OATH penalties in the last year.

Development

On the lot, there is one active new building construction project for a 300-unit, 157,517 square-foot hotel (R-1) building. The project was submitted by Chetrit Group and filed by Meyer Chetrit with plans filed April 5, 2016 and permitted November 15, 2019.

The neighborhood

In Garment District, The majority, or 70 percent of the 52.2 million square feet of commercial built space are office buildings, with hotel buildings next occupying 12 percent of the space. In sales, Garment District has 2.7 times the average sales volume among other neighborhoods with $928.4 million in sales volume in the last two years and is the 15th highest in Manhattan. For development, Garment District has 2 times the average amount of major developments relative to other neighborhoods and is the 14th highest in Manhattan. It had 2 million square feet of commercial and multi-family construction under development in the last two years, which represents 4 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 16 of the 27 commercial properties representing 948,897 square feet of the 2,262,329 square feet. The largest owner is Albert Srour, followed by Atco Properties & Management and then Chetrit Group.
On the tax block, there were five new building construction projects totaling 273,414 square feet. The largest is a 300-unit, 157,517 square-foot hotel/dormitory/shelter (R-1) building submitted by Chetrit Group and filed by Meyer Chetrit with plans filed April 5, 2016 and permitted August 21, 2017. The second largest is a 180-unit, 45,026 square-foot hotel/dormitory/shelter (R-1) building submitted by Cornell Realty Management and filed by Isaac Hager with plans filed January 6, 2014 and it has not been permitted yet.

The majority, or 75 percent of the 2.3 million square feet of built space are office buildings, with hotel buildings next occupying 16 percent of the space.

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