Meadow Partners loses Gregory Hotel in foreclosure, Denis Xhari and Vlash Pepa pay $33.9M for referee deed

Denis Xhari and Vlash Pepa have acquired The Gregory hotel for $33.9 million from Meadow Partners through a referee deed, newly filed public records show.

Meadow Partners faced foreclosure for the Garment District hotel, located at 42 West 35th Street after lender AllianceBernstein filed to foreclose in May of 2021. The original principal of $31 million was provided in 2017 by AllianceBernstein.

Capstone Equities subsequently bought the note in February of 2022, as PincusCo reported at the time. Meadow Partners had originally purchased the hotel in 2014 for $49.3 million.

A total judgment amount of $33.078 million was passed down and filed in court documents on March 29. The sale closed on March 24, 2022 and was recorded on March 31, 2022.

Tideway Capital provided $20 million in acquisition funding to Denis Xhari and Vlash Pepa for the purchase.

Mitchell D. Haddad was the signatory as referee on the deed. Denis Xhari and Vlash Pepa both signed on the mortgage, represented by Evan Schieber of Rivkin Radler LLP. Denis Xhari, with partner Anila Celi  previously purchased a Sunnyside property for $10.2 million.

The 42 West 35th Street property has 55,498 square feet of built space and 3,732 square feet of additional air rights for a total buildable of 59,250 square feet according to PincusCo analysis of city data. The sale price per built square foot is $610 and the price per buildable square foot is $571 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.)

Meadow Partners did not immediately respond to a PincusCo request for comment.

The property

The 42 West 35th Street parcel has frontage of 60 feet and is 98 feet deep with a total lot size of 5,925 square feet. The zoning is C6-4.5 which allows for up to 12 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $13.2 million.

Violations and lawsuits

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $28 million commercial foreclosure concerning a loan filed, on April 30, 2021, by AllianceBernstein against Meadow Partners. In addition, according to city public data, the property has received seven DOB violations, $1,250 in ECB penalties, and $1,500 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Garment District, the majority, or 69 percent of the 53 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 4.1 times the average sales volume among other neighborhoods with $1.1 billion in sales volume in the last two years and is the 9th highest in Manhattan. For development, Garment District has had very little major development activity relative to other neighborhoods.It had 561,900 square feet of commercial and multi-family construction under development in the last two years, which represents 1 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 13 of the 27 commercial properties representing 1,077,465 square feet of the 1,753,785 square feet. The largest owner is SL Green Realty, followed by IceCap Group and then BLDG Management. There is one active new building construction project totaling 173,835 square feet. It is a 363-unit, 173,835-square-foot hotel (R-1) building developed by Andrew Lester with plans filed April 29, 2021 and it has not been permitted yet.

the majority, or 90 percent of the 1.5 million square feet of built space are office buildings, with hotel buildings next occupying 4 percent of the space.

Surrounding

Within a 400-foot radius of 42 West 35th Street, Pincusco identified 21 commercial real estate items of interests occurred over the past 24 months.
Of those 21 items, one was in new building development. It was a new building permit application filed on April 29, 2021 for a 176,375-square-foot R-1 building with 363 residential units at 25 West 34th Street.
Of those 21 items, five were sales above $5 million totaling $257.5 million. The most recent of the five was Dong Yin Development (Holdings) Limited which bought the 122,859-square-foot, one-unit hotel (H2) on 63 West 35th Street and one other property for $67.9 million from Pure Virtue Enterprises Limited on January 20, 2022.
Of those 21 items, 15 were loans above $5 million totaling $646.9 million. The most recent of the 15 was R&B Realty Group which borrowed $52 million from Lightstone Group secured by the 60,931-square-foot, one-unit office building (O6) on 28 West 36th Street and two other properties on March 16, 2022.

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