Prospect Ridge pays $59.8M to KSL Capital, Hersha for hotel in Chelsea

Prospect Ridge through the entity Cactus Street Propco LLC paid $59.8 million to KSL Capital Partners and Hersha Hospitality Trust through the entity Brisam Management (De) LLC for the Holiday Inn Express New York City – Chelsea building (H3) at 232 West 29th Street in Chelsea, Manhattan. The expected use is cash flowing.
The deal closed on November 8, 2024 and was recorded on November 18, 2024. The property has 71,541 square feet of built space and 36,696 square feet of additional air rights for a total buildable of 108,250 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $836 and the price per buildable square foot is $552 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.)
KSL bought the property within a portfolio on November 28, 2023, for $317.8 million. The signatory for KSL Capital Partners and Hersha Hospitality Trust was Stephanie Galli of Hersha. The signatory for Prospect Ridge was Matthew Livian, managing director at the firm. The contract date was May 24, 2024.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Prospect Ridge had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller KSL Capital Partners purchased six properties in one transaction for a total of $317.8 million and sold one property in one transaction for a total of $24.1 million over the same time period. The former owners according to the Department of Housing Preservation and Development includes Ashish Parikh, head officer and Jay Shah, officer. The business entity is Brisam Management (De), Llc.

The property

The hotel building in Chelsea has 71,541 square feet of built space and 36,696 square feet of additional air rights for a total buildable of 108,250 square feet according to a PincusCo analysis of city data. The parcel has frontage of 99 feet and is 98 feet deep with a total lot size of 10,825 square feet. The lot is irregular. The zoning is M1-6D which allows for up to 10 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $34.9 million. The most recent loan totaled $50.1 million and was provided by Wells Fargo|Citibank on November 28, 2023.

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 $750 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on September 13, 2012. 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 Chelsea, The bulk, or 35 percent of the 52.5 million square feet of commercial built space are office buildings, with elevator buildings next occupying 28 percent of the space. In sales, Chelsea has the 7th highest sale turnover among other neighborhoods in the city with $1.1 billion in sales volume in the last two years. For development, Chelsea has 1.7 times the average amount of major developments relative to other neighborhoods and is the 19th highest in Manhattan. It had 1.8 million square feet of commercial and multi-family construction under development in the last two years, which represents 4 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of eight of the 21 commercial properties representing 963,926 square feet of the 1,660,370 square feet. The largest owner is Lexin Capital, followed by GDS Development and then KSL Capital Partners.
On the tax block, there were five new building construction projects totaling 1,139,243 square feet. The largest is a 480-unit, 351,185 square-foot residential (R-2) building submitted by MAG Partners and filed by Susi Yu with plans filed September 16, 2019 and permitted May 18, 2021. The second largest is a 323-unit, 258,285 square-foot residential (R-2) building submitted by Edison Properties and filed by Gary Dorin with plans filed December 2, 2014 and permitted April 16, 2015.

The majority, or 47 percent of the 1.7 million square feet of built space are office buildings, with elevator buildings next occupying 44 percent of the space.

The seller

The PincusCo database currently indicates that KSL Capital Partners owned at least five commercial properties in New York City with 385,293 square feet and a city-determined market value of $173.9 million. (Market value is typically about 50% of actual value.) Within the portfolio, all identified are hotel properties. The bulk, or 80 percent of the built space, is in Manhattan, with Queens next at 20 percent of the space.

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