Penn South Capital pays $14.7M to Kushner for two walkups in Alphabet City

UPDATED: Parag Sawhney and Raymond Chera’s Penn South Capital paid $14.7 million to Kushner Companies for two walkup buildings at 325 East 10th Street and 23 Avenue A in Alphabet City, Manhattan, in two separate transactions. The Real Deal reported on these transactions last week, saying it was part of a $41 million portfolio sale.

In the larger, Penn South Capital through the entity 325ev1 LLC paid $9.6 million to Kushner Companies through the entity Kushner Village 325 East 10th LLC for the 18-unit residential walkup building (C4) at 325 East 10th Street in Alphabet City, Manhattan.
The deal closed on January 30, 2024 and was recorded on February 6, 2024. The property has 11,000 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $874 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 seller bought the property on March 14, 2013, for $8.5 million. The signatory for Kushner Companies was Matthew Burrows. The signatory for Penn South Capital was Parag Sawhney. The contract date was September 29, 2023.

In the second, Penn South Capital through the entity 23ev1 LLC paid $5.1 million to Kushner Companies through the entity Ev Avenue A Property Owner, L.P. for the six-unit mixed-use building (S5) at 23 Avenue A in East Village, Manhattan. The deal closed on January 30, 2024 and was recorded on February 6, 2024. The property has 4,388 square feet of built space and 528 square feet of additional air rights for a total buildable of 4,920 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $1,157 and the price per buildable square foot is $1,032 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 seller bought the property on September 18, 2013, for $5.3 million. The signatory for Kushner Companies was Matthew Burrows. The signatory for Penn South Capital was Parag Sawhney. The contract date was September 29, 2023.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Penn South Capital purchased 12 properties in 12 transactions for a total of $60.3 million and sold two properties in two transactions for a total of $13 million over the past 24 months.
The seller Kushner Companies had not purchased any other properties and sold 12 properties in eight transactions for a total of $140.4 million over the same time period. The former owners according to the Department of Housing Preservation and Development includes Tara Dexter, head officer and Kevin Schreiber, head officer. The business entity is Kushner Village 325 East 10th Llc.

The property

The residential walkup building with 18 residential units in Alphabet City has 11,000 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 25 feet and is 94 feet deep with a total lot size of 2,370 square feet. The zoning is R8B which allows for up to 4 times floor area ratio (FAR) for residential. The property is in the East 10th Street Historic District. The city-designated market value for the property in 2022 is $4.3 million. The most recent loan totaled $36.5 million and was provided by Citibank on November 21, 2019.

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 received two housing violations and $3,650 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 23 of the 37 commercial properties representing 201,708 square feet of the 312,518 square feet. The largest owner is Tony Jones, followed by Targo Capital Partners and then Raj Associates.
There are no active new building construction projects on this tax block.

The majority, or 84 percent of the 312,518 square feet of built space are walkup buildings, with mixed-use buildings next occupying 11 percent of the space.

The seller

The PincusCo database currently indicates that Kushner Companies owned at least 44 commercial properties with 749 residential units in New York City with 445,045 square feet and a city-determined market value of $173.3 million. (Market value is typically about 50% of actual value.) The portfolio has $520.8 million in debt, with top three lenders as AIG, Argentic Investment Management, and MSC 2019-L3 respectively. Within the portfolio, the bulk, or 89 percent of the 445,045 square feet of built space are walkup properties, with elevator properties next occupying 7 percent of the space. The bulk, or 89 percent of the built space, is in Manhattan, with Brooklyn next at 11 percent of the space.

The buyer

The PincusCo database currently indicates that Penn South Capital owned at least 18 commercial properties with 116 residential units in New York City with 106,093 square feet and a city-determined market value of $54.8 million. (Market value is typically about 50% of actual value.) The portfolio has $92.3 million in debt, with top three lenders as KeyBank, Shelter Growth Capital Partners, and Midcap Financial respectively. Within the portfolio, the bulk, or 49 percent of the 106,093 square feet of built space are walkup properties, with office properties next occupying 12 percent of the space. The bulk, or 71 percent of the built space, is in Manhattan, with Brooklyn next at 29 percent of the space.

UPDATED with addition of co-owner Raymond Chera.

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