Ori Kushnir pays $9.3M for bankrupt walkup, retail in East Village

Ori Kushnir through the entity 78smp10003 LLC paid $9.3 million to the bankrupt estate formerly owned by Lawrence Otway, Lorcan Otway, and Eugenie Otway through the entity Marianne T. O’Toole, As Chapter 7 Trustee for the seven-unit residential walkup building (C7) at 78-80 St. Marks Place in East Village, Manhattan.
The deal closed on June 8, 2023 and was recorded on July 3, 2023. The property has 14,400 square feet of built space and 5,118 square feet of additional air rights for a total buildable of 19,500 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $644 and the price per buildable square foot is $476 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 the bankrupt Lawrence Otway, Lorcan Otway, and Eugenie Otway estate was Marianne T. O’Toole. The signatory for Ori Kushnir was Ori Kushnir. Ori Kushnir is a resident of the building. No debt was recorded as an acquisition loan.
The Village Sun first reported Ori Kushnir was the buyer a day after the May 9, 2023 bankruptcy auction by Maltz Auctions and Cushman & Wakefield.

The final sale price is the $8.7 million bid plus 4 percent buyer’s premium. The opening bid was $8.5 million by Kushnir, the stalking horse bidder, then an intermediate bid then $8.7 million by Kushnir. The 4% premium is $348,000.

Marianne T. O’Toole is the bankruptcy trustee.

The bankruptcy case was 21-12139-mg, and Otway sued the former debt holder Maverick Real Estate Partner in New York State Supreme Court through index number. 656446/2021.

Lawrence “Lorcan” Otway owned the 14,400-square foot, three-building property with seven residential apartments, a restaurant, theater and gangster museum. He sought to block note holder Maverick Real Estate Partners from holding a UCC auction of his interest in the property, which his family has owned for decades.

Hirshmark Capital provided a $6.1 million loan in November 2019, which matured a year later, in December 2020. At the time of the loan, the Otways had annual revenues of approximately $800,000. Then the Covid-19 pandemic forced theaters and restaurants to close. Hirshmark sold the debt to Maverick December 1, 2020. Maverick sent a notice in September 2021 to the Otways that they would hold a UCC auction set for November 18, 2021, to sell the Otways’ interest in the building. The building, according to the complaint, was constructed in the 1820’s over a Dutch hunting cabin from the 1630s. The cabin’s foundations are visible in the basement, the complaint says. The Otways claim “The Notice is unreasonable in that it does not provide Plaintiffs sufficient time in which to cure any default…” and that they have potential refinancing options, including from a California-based lender called Whisper Capital which valued the building at $15 million, but that financing never materialized.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Ori Kushnir had purchased any other properties and has no record it sold any properties over the past 24 months.
The former owner Lawrence Otway had not purchased any other properties and had not sold any properties over the same time period. The 14,400-square-foot property generated revenue of $558,432 or $39 per square foot, according to the most recent income and expense figures.

The property

The residential walkup building with 7 residential units in East Village has 14,400 square feet of built space and 5,118 square feet of additional air rights for a total buildable of 19,500 square feet according to a PincusCo analysis of city data. The parcel has frontage of 50 feet and is 97 feet deep with a total lot size of 4,875 square feet. The zoning is R7A which allows for up to 4 times floor area ratio (FAR) for residential with inclusionary housing. The city-designated market value for the property in 2022 is $7.8 million. The most recent loan totaled $6.1 million and was provided by Maverick Real Estate Partners on December 1, 2020.

Violations and lawsuits

The property was involved in one lawsuit and one bankruptcy over the past two years. The suit was a $15 million judgment concerning a UCC sale filed on November 11, 2021, by Lawrence Otway, Lorcan Otway, and Eugenie Otway against Maverick Real Estate Partners. The bankruptcy was filed on December 29, 2021, by Lawrence Otway and 78-80 ST. Marks Place LLC citing assets of $15 million. In addition, according to city public data, the property has received one DOB violation and $1,600 in OATH penalties 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 block

On this tax block, PincusCo has identified the owners of 18 of the 47 commercial properties representing 163,431 square feet of the 390,836 square feet. The largest owner is Zenon Chernyk, followed by Sabet Group and then S.W. Management.
There are no active new building construction projects on this tax block.

The majority, or 78 percent of the 390,836 square feet of built space are walkup buildings, with mixed-use buildings next occupying 14 percent of the space.

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