MetLife as former lender acquires ATCO’s Garment District building through $30M foreclosure

The former lender on the property, MetLife, through the entity 240 West 35th Owner LLC acquired from ATCO Properties & Management the office building (O6) at 240 West 35th Street in the Garment District, Manhattan, through a foreclosure auction with the transfer value of $30 million. The prior debt was $72.75 million provided in 2018.
The transfer closed on June 26, 2024 and was recorded on July 9, 2024. The property has 145,372 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $206 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.)
ATCO bought the property on December 20, 2016, for $108 million. The signatory for the court was Elaine Shay. The signatory for MetLife was Justin Besspiata. The contract date was June 26, 2024.
This is not an arms length transaction, since it is the lender, MetLife, taking back an office building from borrower ATCO through a foreclosure auction. PincusCo reported that the loan was set for auction.

On July 3, 2023, MetLife filed a $72.7 million pre-foreclosure action against the building, 850437/2023, which PincusCo reported at the time. The court issued the judgment of foreclosure and sale in January, which was unopposed by ATCO, the court records show. The highest bid at the auction was $30 million. MetLife lent $72.75 million in January 2018.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer MetLife purchased three properties in two transactions for a total of $68.1 million and has no record it sold any properties over the past 24 months.
The seller ATCO Properties & Management bought out Ruben Brothers at 630 Third Avenue for a total of $97.8 million and had not sold any properties over the same time period.

The property

The office building in Garment District has 145,372 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 100 feet and is 98 feet deep with a total lot size of 9,875 square feet. The zoning is M1-6 which allows for up to 10 times floor area ratio (FAR) for manufacturing. The city-designated market value for the property in 2022 is $36.7 million.

Violations and lawsuits

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $72.8 million commercial foreclosure concerning a loan filed on July 3, 2023, by MetLife against Atco Properties & Management. In addition, according to city public data, the property has received one DOB violation and $6,880 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on September 20, 2012. 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 Garment District, The majority, or 69 percent of the 52.3 million square feet of commercial built space are office buildings, with hotel buildings next occupying 13 percent of the space. In sales, Garment District has 1.9 times the average sales volume among other neighborhoods with $512.4 million in sales volume in the last two years and is the 17th highest in Manhattan. For development, Garment District is the 4th most active neighborhood among other neighborhoods. It had 6.8 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. There were two pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 17 of the 27 commercial properties representing 948,897 square feet of the 2,262,329 square feet. The largest owner is Vornado Realty Trust, followed by Solil Management and then Shel Capital.
On the tax block, there were three new building construction projects totaling 196,772 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 27,048 square-foot business (B) building submitted by Churchill Real Estate Holdings and filed by Jake Borden with plans filed April 26, 2016 and permitted December 10, 2018.

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.

The seller

The PincusCo database currently indicates that ATCO Properties & Management owned at least five commercial properties with 316 residential units in New York City with 923,847 square feet and a city-determined market value of $239.6 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 71 percent of the 923,847 square feet of built space are office properties, with elevator properties next occupying 29 percent of the space. They are all located in Manhattan.

The buyer

The PincusCo database currently indicates that Metlife owned at least one commercial property with 36 residential units in New York City with 42,500 square feet and a city-determined market value of $11.6 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single elevator property. It is located in Brooklyn.

Direct link to Acris document. link