Naftali Group signs ground lease valued at $12.5M in Kips Bay

Naftali Group through the entity 201 East 23rd Street Tenant LLC as tenant signed a ground lease valued at $12.5 million with BNS Real Estate through the entity Snake River Development LLC as landlord for the corner development site at 301 Third Avenue in Kips Bay, Manhattan.
The deal closed on August 22, 2023 and was recorded on August 31, 2023. The property has 14,456 square feet of built space and 57,816 square feet of additional air rights for a total buildable of 72,270 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $864 and the price per buildable square foot is $172 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.)
The signatory for BNS Real Estate was Bradford S. Barr. The signatory for the Naftali Group was Michael Naftali. The 99-year lease started August 22, 2023 and runs until August 31, 2122. BNS Real Estate’s Swett family bought the building for $7 million in April 2001.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Naftali Group purchased two properties in two transactions for a total of $72.6 million and sold 20 properties in 16 transactions for a total of $261.6 million over the past 24 months.
The seller BNS Real Estate had not purchased any other properties and sold four properties in three transactions for a total of $85.6 million over the same time period. The 14,456-square-foot property generated revenue of $3.1 million or $217 per square foot, according to the most recent income and expense figures.

The property

The retail building in Kips Bay has 14,456 square feet of built space and 57,816 square feet of additional air rights for a total buildable of 72,270 square feet according to a PincusCo analysis of city data. The parcel has frontage of 74 feet and is 97 feet deep with a total lot size of 7,227 square feet. The lot is irregular. The zoning is C2-8A which allows for up to 2 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $15.1 million. The most recent loan totaled $6 million and was provided by Regnum Partners on June 10, 2022.

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

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 Kips Bay, The bulk, or 50 percent of the 21.5 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 32 percent of the space. In sales, Kips Bay has 2.2 times the average sales volume among other neighborhoods with $791.7 million in sales volume in the last two years and is the 16th highest in Manhattan. For development, Kips Bay has had very little major development activity relative to other neighborhoods.It had 606,101 square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of eight of the 12 commercial properties representing 175,803 square feet of the 328,176 square feet. The largest owner is Hakimian Organization, followed by Forest Hills Property Group and then Croman Real Estate.
There are no active new building construction projects on this tax block.

The majority, or 31 percent of the 328,176 square feet of built space are elevator buildings, with specialty buildings next occupying 29 percent of the space.

The seller

The PincusCo database currently indicates that BNS Real Estate owned at least two commercial properties with 80 residential units in New York City with 139,803 square feet and a city-determined market value of $14.4 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 56 percent of the 139,803 square feet of built space are industrial properties, with elevator properties next occupying 44 percent of the space. The bulk, or 56 percent of the built space, is in Bronx, with Brooklyn next at 44 percent of the space.

The buyer

The PincusCo database currently indicates that Naftali Group owned at least 11 commercial properties with 371 residential units in New York City with 844,656 square feet and a city-determined market value of $155.9 million. (Market value is typically about 50% of actual value.) The portfolio has $857.4 million in debt, with top three lenders as HSBC Bank, Bank Hapoalim, and Bank OZK respectively. Within the portfolio, the bulk, or 67 percent of the 844,656 square feet of built space are elevator properties, with development properties next occupying 28 percent of the space. The bulk, or 67 percent of the built space, is in Manhattan, with Brooklyn next at 33 percent of the space.

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