Sage Hall Partners buys $81M note secured by Shorewood’s former AKA United Nations hotel in Grand Central

Sage Hall Partners through the entity East 46th Street LLC bought a note with an original principal of $81 million from the Canadian Imperial Bank of Commerce secured by Shorewood Real Estate Group and Korman Communities’ 95-unit extended stay hotel building (HS) at 234 East 46th Street in Grand Central, Manhattan. Prodigy Network was formerly a partner in the venture, but the company formally closed in 2020 following its bankruptcy filing, The Real Deal reported at the time. The hotel is currently shuttered.
The deal closed on February 14, 2023 and was recorded on February 15, 2023. The prior lender was Canadian Imperial Bank of Commerce which held debt that had an original loan amount of $81 million.The property has 82,829 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $zero 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 owner bought the property on September 17, 2014, for $68.5 million. The signatory for Sage Hall Partners was Jeffrey Fields. Sage Hall Partners purchased the defaulted $81 million note on the Shorewood Real Estate Group hotel at 234 East 46th Street in Grand Central, Manhattan, which is currently shuttered but had previously been the AKA United Nations. The note seller was the Canadian Imperial Bank of Commerce, which filed the pre-foreclosure action 850006/2021 in February 2021.

Last month, the judge in the case set the foreclosure sale for April 19, 2023 at 60 Centre Street in Lower Manhattan.

Shorewood and Prodigy bought the building for $68.5 million in 2014, then refinanced it with CIBC for $81 million. Prodigy Network’s CEO Rodrigo Nino died in 2020.

According to the Sage Hall website, the private equity firm was founded in 2020 by Lanhee Yung, formerly the global head of Starwood Capital’s Fundraising and Investor Relations Group, and Sush Torgalkar, formerly president at Gary Barnett’s Extell Development. Sage Hall plans to focus in New York City assets, according to materials from 2021.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes Roberta Ashkin, head officer and Eric Goodman, agent. The business entities are Eric Goodman Realty and 234 East 46th Street Property Owner Llc.

The property

The 234 East 46th Street parcel has frontage of 75 feet and is 100 feet deep with a total lot size of 7,537 square feet. The zoning is R10 which allows for up to 10 times floor area ratio (FAR) for residential with inclusionary housing. The city-designated market value for the property in 2022 is $12.7 million.

Violations and lawsuits

The property was involved in one lawsuit and one bankruptcy over the past two years. The suit was an $81 million commercial foreclosure concerning a loan filed on February 8, 2021, by Canadian Imperial Bank of Commerce against AKA, Prodigy Network, and Shorewood Real Estate. In addition, according to city public data, the property has received three DOB violations, $1,250 in ECB penalties, and $3,750 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 $5 million on this tax lot. On the tax lot, before the hotel plan was executed, Prodigy considered developing it as a condo. The most recent condominium plan was filed by 234 EAST 46TH STREET PROPERTY OWNER LLC to create 95 residential units in a building at 234 East 46th Street in Midtown East, Manhattan, called Aka United Nations Condominium Residences that has a $137.6 million sellout, according to an February 19, 2015 submission to the New York State Attorney General. The principals of the sponsor, 234 EAST 46TH STREET PROPERTY OWNER LLC, were S. Lawrence Davis, Bradley Korman, Lawrence Korman, and Rodrigo Nino.

The neighborhood

In Grand Central, the majority, or 81 percent of the 43.5 million square feet of commercial built space are office buildings, with hotel buildings next occupying 8 percent of the space. In sales, Grand Central has 3 times the average sales volume among other neighborhoods with $1 billion in sales volume in the last two years and is the 14th highest in Manhattan. For development, Grand Central has 2.5 times the average amount of major developments relative to other neighborhoods and is the 12th highest in Manhattan. It had 2.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 6 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of five of the 221 commercial properties representing 492,264 square feet of the 1,096,411 square feet. The largest owner is Slate Property Group, followed by Oak B Management and then Durst Organization.
On the tax block, there was one new building construction project filed totaling 20,412 square feet. It is a 15-unit, 20,412-square-foot R-2 building developed by Eduard Slinin with plans filed October 7, 2015 and it has not been permitted yet.

The majority, or 79 percent of the 986,973 square feet of built space are office buildings, with elevator buildings next occupying 9 percent of the space.

The borrower

The PincusCo database currently indicates that Shorewood Real Estate Group owned at least two commercial properties in New York City with 389,560 square feet and a city-determined market value of $13.6 million. (Market value is typically about 50% of actual value.) The portfolio has $110.1 million in debt, borrowed from East West Bank and Bayview Commercial Mortgage Finance, LLC. Within the portfolio, the bulk, or 100 percent of the 389,560 square feet of built space are elevator properties, with walkup properties next occupying 0 percent of the space. They are all located in Queens.

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