REEC was partner with Mavik on Harlem properties lost in $14.6M foreclosure, Mark Tress is buyer

Brandon Miller’s Real Estate Equities Corporation which had partnered with distress investor Mavik Capital Management on the Harlem property 313 West 125th Street, lost the asset that had debts of $14.6 million in a foreclosure last week. Mark Tress, a Lakewood, New Jersey investor who owns Cedar Health Group, was the buyer. He also operates under the New Jersey entity Cedar Holdings LLC. The seller was East West Bank, the prior lender.

REEC acquired the ground lease valued at $5 million in 2015. Solil Managment, the entity which manages the assets of the family of the late Sol Goldman, owns the fee.

In this transfer, Mark Tress of Cedar Holdings LLC through the entity West 125th Partners LLC paid $3.6 million to East West Bank, which foreclosed on Brandon Miller’s Real Estate Equities Corporation for specialty building (W6) at 313 West 125th Street in Harlem, Manhattan and an adjacent vacant parcel on West 126th Street in Harlem, Manhattan.
The transfer closed on January 27, 2023 and was recorded on January 31, 2023. The two properties have 23,547 square feet of built space and 34,625 square feet of additional air rights for a total buildable of 58,165 square feet according to PincusCo analysis of city data. The sale price per built square foot is $152 and the price per buildable square foot is $61 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 Real Estate Equities Corporation foreclosed and Real Estate Equities Corporation was Allison Furman. The signatory for Cedar Holdings LLC was Mark Tress.

According to court records, the final judgment was $14.64 million, the upset price, which is the total amount due to the bank after post-sale disbursements, was $4.2 million, and the sale price was $3.6 million.

According to an email in the court record from lender East West Bank, distress investor Mavik Capital Management owned a stake in the property through its acquisition of Terra Capital Partners, which owned an equity stake in the property.

Court records reflect the positions of one party and are not necessarily accurate or complete.

The email reads, “Under your ownership (with Mavik – which has more than sufficient funds to maintain and improve the property via its relationship with Blackstone), you have allowed the property to deteriorate to the point where it has become an eyesore to the community. This would not reflect well on you or on Mavik to let this situation continue.”

According to an affidavit of Steven Chang a senior vice president  of East West Bank, “On August 31, 2021, via an email sent to Plaintiff by Michael Muscat of Mavik, REEC advised Plaintiff that the “equity owners” of REEC were “unwilling at [that] time to put more money into the property” unless Plaintiff entered into an agreement to restructure REEC’s debt to Plaintiff.”  And according to a Bloomberg report from 2021, Blackstone acquired an interest in Mavik.

Real Estate Equities Corporation is led by Brandon Miller. Mark Tress, who is involved in health care through Cedar Health Group owns Cedar Holdings LLC of Lakewood, New Jersey.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 313 West 125th Street.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Cedar Holdings LLC had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Real Estate Equities Corporation in August 2022 signed a $60.5 million loan from Raven Capital Management.

The property

The 313 West 125th Street parcel has frontage of 50 feet and is 110 feet deep with a total lot size of 5,500 square feet. The zoning is C4-4D which allows for up to 3.4 times floor area ratio (FAR) for commercial and up to 6.02 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $4.7 million.

Violations and lawsuits

The properties were involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $13.1 million commercial foreclosure concerning a loan filed on October 18, 2021, by East West Bank against Real Estate Equities Corp.. In addition, according to city public data, the properties have not received any significant violations in the last year.

Development

For the tax lot buildings, one out of the two buildings received a initial certificate of occupancy in the last ten years. There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Harlem, the bulk, or 44 percent of the 79.7 million square feet of commercial built space are elevator buildings, with walkup buildings next occupying 31 percent of the space. In sales, Harlem has 2.2 times the average sales volume among other neighborhoods with $741.1 million in sales volume in the last two years and is the 20th highest in Manhattan. For development, Harlem has 3.8 times the average amount of major developments relative to other neighborhoods and is the 6th highest in Manhattan. It had 3.8 million square feet of commercial and multi-family construction under development in the last two years, which represents 5 percent of the neighborhood’s built space. There were four pre-foreclosure suit filed among other specialty buildings in the past 12 months.

The block

On the tax block of 313 West 125th Street, PincusCo has identified the owners of nine of the 20 commercial properties representing 246,596 square feet of the 301,424 square feet. The largest owner is United States Postal Service, followed by Sol Goldman Investments and then Mitchell Mekles.
There are no active new building construction projects on this tax block.

The majority, or 43 percent of the 301,424 square feet of built space are retail buildings, with specialty buildings next occupying 21 percent of the space.

The seller

The PincusCo database currently indicates that Real Estate Equities Corporation owned at least 10 commercial properties in New York City with 43,803 square feet and a city-determined market value of $21 million. (Market value is typically about 50% of actual value.) The portfolio has $178.5 million in debt, with top three lenders as Parkview Financial, Raven Capital Management, and Heritage Capital Management respectively. Within the portfolio, the bulk, or 100 percent of the 43,803 square feet of built space are mixed-use properties, with development properties next occupying 0 percent of the space. They are all located in Manhattan.

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