Northwind Group lends $85.3M to LES hotel exiting bankruptcy

The entity 225 Bowery LLC as borrower, which owns the Lower East Side hotel at 225 Bowery, signed a refi loan with lender Northwind Group through the entity 225 Bowery Lender LLC valued at $85.3 million. The entity 225 Bowery LLC is exiting bankruptcy after the property’s former owner David Paz placed the highly litigated building into bankruptcy.
The deal closed on July 18, 2024 and was recorded on July 24, 2024. The prior lender was Northwind Group 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 $1,341 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.)
David Paz of Omnia Group bought the property on February 25, 2014, for $30.5 million.
The signatory for 225 Bowery LLC in this refinance was Nat Wasserstein, the chief restructuring officer for the property, who is not involved in ownership. The signatory for Northwind Group was Ran Eliasaf.
David Paz placed the property in bankruptcy in 2023 through number U.S. Bankruptcy 23-10094 (TMH). The property has been subject to a handful of State Supreme Court cases such as index number 850096/2022.

In another case, Los Angeles-based lender 8th Bridge Capital through the entity Manhattan Real Estate Fund LP filed a $19.5 million action on November 9, 2023, against developer David Paz and his Omnia Group. The lender is seeking repayment of the loan.

The property was operating under the name Untitled at 3 Freeman with an address of 3 Freeman Alley.

The building has been the subject of at least five major court actions including a bankruptcy filing that David Paz filed and another action investor Northwind Group filed. An affiliate of Northwind Group bought the $68 million defaulted senior loan on the property in April 2023.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes David Paz, head officer and Hernan Galvis, agent. 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. The most recent loan totaled 0.0 and was provided by Northwind Group on April 28, 2023.

Violations and lawsuits

The property was involved in two lawsuits and one bankruptcy over the past two years. The highest value suit was a $19.5 million money judgment concerning a loan filed on November 9, 2023, by 8th Bridge Capital 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 $21,750 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 near average sales volume among other neighborhoods with $231.5 million in sales volume in the last two years and is the 29th highest in Manhattan. For development, Lower East Side has had very little major development activity relative to other neighborhoods.It had 547,342 square feet of commercial and multi-family construction under development in the last two years, which represents 2 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 11 of the 26 commercial properties representing 255,039 square feet of the 377,750 square feet. The largest owners include Arthur Karpati, followed by Better Living Properties and then David Paz.
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.

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