Related signs $35.8M refi for Barnes & Noble building on Union Square

Related Companies through the entity 17th Street Associates as borrower signed a refi loan with lender Bank of America valued at $35.8 million for the midblock mixed-use building at 33 East 17th Street in Flatiron District, Manhattan.
The deal closed on March 18, 2022 and was recorded on March 25, 2022. The prior lender was 100 FREEDOM PLACE SOUTH I LLC which held debt that had an original loan amount of $25 million.The property has 120,822 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $295 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 Related Companies was David K. Zussman. The signatory for Bank of America was Christopher Wilson. David Zussman is Chief Financial Officer of Related Companies.

The property

The 33 East 17th Street parcel has frontage of 71 feet and is 184 feet deep with a total lot size of 16,825 square feet. The lot is irregular. The zoning is M1-5M which allows for up to 5 times floor area ratio (FAR) for manufacturing. The city-designated market value for the property in 2022 is $33 million.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has received 11 DOB violations, $11,250 in ECB penalties in the last year.

Development

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 Flatiron District, the majority, or 62 percent of the 27.7 million square feet of commercial built space are office buildings, with residential elevator buildings next occupying 25 percent of the space. In sales, Flatiron District has the 6th highest sale turnover among other neighborhoods in the city with $1.6 billion in sales volume in the last two years. For development, Flatiron District has had very little major development activity relative to other neighborhoods.It had 583,415 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 four of the 36 commercial properties representing 144,900 square feet of the 908,371 square feet. The largest owner is Eretz Group, followed by Bijan Nassi and then David Magier. There is one active new building construction project totaling 38,263 square feet. It is a 38,263-square-foot office (B) building developed by Ken Rosenblum with plans filed April 27, 2020 and it has not been permitted yet.

The majority, or 41 percent of the 1 million square feet of built space are office buildings, with mixed-use buildings next occupying 30 percent of the space.

The borrower

The PincusCo database currently indicates that Related Companies owned at least 166 commercial properties with 19,355,585 square feet and a city-determined market value of $4.2 billion. (Market value is typically about 50% of actual value.) The portfolio has $4.3 billion in debt, with top three lenders as Wells Fargo, Carlyle Group, and Bank of America respectively. Within the portfolio, the bulk, or 40 percent of the 19,355,585 square feet of built space are residential elevator properties, with office properties next occupying 33 percent of the space. The bulk, or 56 percent of the built space, is in Manhattan, with Bronx next at 26 percent of the space.

Surrounding

Within a 400-foot radius of 33 East 17th Street, PincusCo identified nine commercial real estate items of interests occurred over the past 24 months.
Of those nine items, one was in new building development. It was a new building permit application filed on April 27, 2020 for a 38,263-square-foot B building at 31 East 17th Street.
Of those nine items, four were for major renovation including a certificate of occupancy change. They were two permit applications with a total initial cost of $1.9 million, one permit with a total initial cost of $2.2 million and one initial temporary certificate of occupancy issuance for a project that initially costed $20 million. The most recent of these four items was the filing on February 28, 2022 for a 50,800-square-foot R-2 building with 17 residential units at 33 Union Square West.
One of those nine items was a sale which Marriott International bought the 200,000-square-foot, three-unit hotel (H1) on 201 Park Avenue South for $166.2 million from Westbrook Partners on October 16, 2019.
Of those nine items, three were loans above $5 million totaling $399.3 million. The most recent of the three was Reading International which borrowed $43 million from Emerald Creek Capital secured by the 70,201-square-foot, two-unit office building (O5) on 44 Union Square on June 2, 2021.

Direct link to Acris document. link