MetLife files $72.7M pre-foreclosure at ATCO Garment District office building

MetLife filed a $72.7 million pre-foreclosure action against the ATCO Properties & Management office building at 240 West 35th Street in the Garment District, Manhattan. MetLife filed the complaint in New York State Supreme Court on July 3, 2023. LINK

According to the complaint, “The Loan matured pursuant to its terms on February 1, 2023. The Borrower, however, has failed to repay the amount due and owing to Lender.”

Court filings represent the position of one party and are not necessarily accurate or complete.
MetLife provided the loan January 5, 2018. ATCO bought the 165,000-square-foot building in December 2016 from RPW Group for $108 million. The large Israeli insurance firm Migdal Group bought a 49 percent stake in the property in 2017. It’s unclear if Migdal still owns a stake in the property.

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

According to city public data, the property has received $4,050 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 the Garment District, The majority, or 69 percent of the 51.8 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 near average sales volume among other neighborhoods with $831.7 million in sales volume in the last two years and is the 16th highest in Manhattan. For development, Garment District has near average amount of major developments among other neighborhoods and is the 7th highest in Manhattan. It had 3.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 7 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 Churchill Real Estate Holdings. On the tax block, there were four new building construction projects totaling 241,798 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 owner

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 surrounding

Within a 400-foot radius of 246 West 35 Street, PincusCo identified seven commercial real estate items of interests occurred over the past 24 months. Of those seven items, two were sales above $5 million totaling $137.5 million. The most recent of the two was Maverick Real Estate Partners which bought the 320-unit hotel (H1) on 255 West 34th Street for $104.5 million from Chetrit Group on March 2, 2023. Of those seven items, five were loans above $5 million totaling $176.9 million. The most recent of the five was Jenel Management in which borrowed $88 million from Aareal Capital secured by the 201,307-square-foot, four-unit mixed-use building (K4) on 223 West 34th Street and one other property on January 13, 2023.

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