MTA pays Extell $82M for East Harlem site next to developer’s 543-unit project

The Metropolitan Transportation Authority paid $82 million to Extell Development through the entity 160 East 125th Owner LLC for the development parcel (V1) at 160 East 125th Street in East Harlem, Manhattan.
The deal closed on April 28, 2023 and was recorded on May 3, 2023. The property has zero square feet of built space and 218,086 square feet of additional air rights for a total buildable of 218,086 square feet according to a PincusCo analysis of city data. The sale price per buildable square foot is $375 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.)

Extell is developing a 543-unit project next door at 180 East 125th Street.

The seller bought the property on April 13, 2014, for $39 million. The signatory for Extell Development was Marc Kwestel. The signatory for Metropolitan Transportation Authority was Robert Paley. MTA bought lot 20 for a new Second Avenue subway station. The contract date was October 3, 2022. According to an MTA meeting document, “Fee simple interest in Lot 20 (the “Lot 20 Fee”) “Permanent volumetric subgrade easement for a ventilation tunnel beneath Lot 27 (the “Lot 27 Easement”) Authorization to acquire the Lot 20 Fee and the Lot 27 Easement and, in connection therewith, to grant to the Lot 27 owner a temporary construction access license agreement to use a 40’ (reducing to 10’ or less on January 31, 2024) strip of Lot 20 along its common boundary with Lot 27… The Lot 20 Fee is required for the New Station and for certain ancillary facilities to be located at the eastern end of the New Station (“Ancillary Facilities”) as well as for construction staging, lay down and soil excavation and extraction from the below-grade tunneling for SAS Phase 2. The Lot 27 Easement is required for the construction of an “adit tunnel” that will provide necessary ventilation between the cavern to be excavated for the New Station and the Ancillary Facilities to be constructed on Lot 20. ”

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Metropolitan Transportation Authority purchased two properties in one transaction for a total of $8.9 million and has no record it sold any properties over the past 24 months.
The seller Extell Development purchased 34 properties in seven transactions for a total of $1.2 billion and sold 52 properties in 50 transactions for a total of $964.6 million over the same time period.

The property

The parcel has frontage of 220 feet and is 179 feet deep with a total lot size of 36,227 square feet. The lot is irregular. The zoning is C4-4D which allows for up to 3.4 times floor area ratio (FAR) for commercial and up to 6.02 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $3 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has not received any significant violations in the last year.

Development

On the lot, there is one active new building construction project for a 354,350 square-foot B building. The project was submitted by Extell Development and filed by David Rothstein with plans filed April 8, 2020 and permitted January 14, 2022.

The neighborhood

In East Harlem, The majority, or 51 percent of the 52.3 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 21 percent of the space. In sales, East Harlem has 1.7 times the average sales volume among other neighborhoods with $597.4 million in sales volume in the last two years and is the 24th highest in Manhattan. For development, East Harlem has 3.9 times the average amount of major developments relative to other neighborhoods and is the 6th highest in Manhattan. It had 4 million square feet of commercial and multi-family construction under development in the last two years, which represents 8 percent of the neighborhood’s built space. There were two pre-foreclosure suit filed among other development buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 10 of the 16 commercial properties representing 32,187 square feet of the 219,877 square feet. The largest owner is Metropolitan Transportation Authority, followed by Maddd Equities and then Extell Development.
On the tax block, there were three new building construction projects totaling 364,904 square feet. The largest is a 354,350 square-foot business (B) building submitted by Extell Development and filed by David Rothstein with plans filed April 8, 2020 and permitted January 14, 2022. The second largest is a 6,050 square-foot mercantile (M) building submitted by Albert Sanfilippo with plans filed December 6, 2018 and it has not been permitted yet.

The majority, or 62 percent of the 219,877 square feet of built space are specialty buildings, with industrial buildings next occupying 21 percent of the space.

The seller

The PincusCo database currently indicates that Extell Development owned at least 68 commercial properties with 671 residential units in New York City with 2,712,766 square feet and a city-determined market value of $699 million. (Market value is typically about 50% of actual value.) The portfolio has $5.4 billion in debt, with top three lenders as Guggenheim Partners, Blackstone Group, and Prudential Credit Opportunities respectively. Within the portfolio, the bulk, or 40 percent of the 2,712,766 square feet of built space are specialty properties, with elevator properties next occupying 21 percent of the space. The bulk, or 95 percent of the built space, is in Manhattan, with Brooklyn next at 4 percent of the space.

The buyer

The PincusCo database currently indicates that Metropolitan Transportation Authority owned at least five commercial properties in New York City with 2,704,468 square feet and a city-determined market value of $867.2 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 100 percent of the 2,704,468 square feet of built space are office properties, with specialty properties next occupying 0 percent of the space. They are all located in Manhattan.

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