Northwind Group buys $68M defaulted note on 225 Bowery in LES, property in bankruptcy

Northwind Group through the entity 225 Bowery Lender LLC bought a note with an original principal of $68 million from Bank Hapoalim secured by David Paz and Omnia Group’s hotel building (H3) at 225 Bowery in Lower East Side, Manhattan.
The hotel is subject to at least four major court actions, including a bankruptcy David Paz filed in January, a pre-foreclosure action Bank Hapoalim filed and a suit Northwind filed seeking a receiver.
The deal closed on April 28, 2023 and was recorded on May 4, 2023. The prior lender was Bank Hapoalim which held debt that had an original loan amount of $68 million.The property has 63,599 square feet of built space according to a PincusCo analysis of city data. The loan price per built square foot is $zero 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 owner bought the property on February 25, 2014, for $30.5 million. The signatory for David Paz and Omnia Group was David Paz.
The note buying entity 225 Bowery Lender LLC is registered at the headquarters of the Northwind Group.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes David Paz, head officer and Karen Primaylon, site manager. The business entity is 225 Bowery Llc.

The property

The hotel building in Lower East Side has 63,599 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 53 feet and is 184 feet deep with a total lot size of 8,576 square feet. The lot is irregular. The zoning is C6-1 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 3.44 times FAR for residential. The city-designated market value for the property in 2022 is $26.2 million.

Violations and lawsuits

The property was involved in three lawsuits and one bankruptcy over the past two years. The highest value suit was a $68 million commercial foreclosure concerning a loan filed on April 28, 2022, by Bank Hapoalim against David Paz and Omnia Group. The bankruptcy was filed on January 24, 2023, by David Paz and Omnia Group citing assets of $10.4 million. In addition, according to city public data, the property has received $7,000 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on February 1, 2019. 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 Lower East Side, The majority, or 51 percent of the 23.8 million square feet of commercial built space are elevator buildings, with walkup buildings next occupying 21 percent of the space. In sales, Lower East Side has 1.5 times the average sales volume among other neighborhoods with $528.5 million in sales volume in the last two years and is the 26th highest in Manhattan. For development, Lower East Side has had very little major development activity relative to other neighborhoods.It had 623,994 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 26 commercial properties representing 72,040 square feet of the 377,750 square feet. The largest owner is Omnia Group, followed by Demarinis and then Better Living Properties.
On the tax block, there were two new building construction projects totaling 91,871 square feet. The largest is a 26-unit, 48,724 square-foot residential (R-2) building submitted by Omnia Group and filed by David Paz with plans filed February 9, 2022 and permitted June 14, 2022. The second largest is a 14-unit, 43,147 square-foot residential (R-2) building submitted by Scott Kummings with plans filed November 22, 2017 and permitted January 24, 2019.

The majority, or 37 percent of the 377,750 square feet of built space are walkup buildings, with office buildings next occupying 22 percent of the space.

The borrower

The PincusCo database currently indicates that Omnia Group owned at least one commercial property in New York City with 9,600 square feet and a city-determined market value of $3.3 million. (Market value is typically about 50% of actual value.) The portfolio has $8 million in debt, borrowed from Bank Leumi. The portfolio consists of at least a single specialty property. It is located in Manhattan.

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