Schwalbes buys out Berkos in Garment District building for $25.1M, partners there since 1970

The Schwalbe family that owns Hilson Management through the entity 390 Manager LLC bought out its long-time fifty-fifty partner, the Berko family’s KMF Holding Corporation, in a transaction valued at $25.1 million at the office building (O6) at 390 Fifth Avenue at the corner of 36th Street, in the Garment District, Manhattan.
The deal closed on June 6, 2024 and was recorded on June 27, 2024. The property has 133,544 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $374 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.)
Jerome Berko through the company Kay Madison Corp. bought a 50% stake in the building in January 12, 1970 for $261,250 according to a PincusCo analysis of transfer records. The Schwalbe family already owned a stake in the building at that time.

In October 1983 Berko transferred the interest from Kay Madison to KMF Holding Corporation. Jerome Berko was identified as a vice president of KMF Holding in a 1996 no-consideration deed transfer of ownership from three owners including KMF Holding into one, 390 Fifth LLC. The other two owners were controlled by Robert Schwalbe and Peter Schwalbe.

Peter Schwalbe was president of Hilson Management and died in 2016.

Jacques Schwalbe was the patriarch of the Schwalbe family and formed Rexon Realty Corp. in the 1940s and Hilson Management Corp. in the 1960s, The Real Deal reported in 2016.

Maverick Real Estate Partners acquired the debt on this building along with seven others, that were part of the Signature Bank portfolio.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Hilson Management had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller KMF Holding had not purchased any other properties and had not sold any properties over the same time period.

The property

The office building in Garment District has 133,544 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 67 feet and is 166 feet deep with a total lot size of 12,574 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The property is in the Individual Landmark. The city-designated market value for the property in 2022 is $35.1 million. The most recent loan totaled 0.0 and was provided by Maverick Real Estate Partners on February 22, 2024.

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 one DOB violation, $1,250 in ECB penalties, and $7,110 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 neighborhood

In Garment District, The majority, or 69 percent of the 52.3 million square feet of commercial built space are office buildings, with hotel buildings next occupying 13 percent of the space. In sales, Garment District has 1.8 times the average sales volume among other neighborhoods with $487.3 million in sales volume in the last two years and is the 18th highest in Manhattan. For development, Garment District is the 4th most active neighborhood among other neighborhoods. It had 6.8 million square feet of commercial and multi-family construction under development in the last two years, which represents 13 percent of the neighborhood’s built space. There were three pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 16 of the 33 commercial properties representing 900,219 square feet of the 1,436,912 square feet. The largest owner is Yosef Nazar, followed by Toni Park and then Rosen Equities.
There are no active new building construction projects on this tax block.

The majority, or 44 percent of the 1.4 million square feet of built space are office buildings, with hotel buildings next occupying 43 percent of the space.

The buyer

The PincusCo database currently indicates that Hilson Management owned at least two commercial properties with 37 residential units in New York City with 164,999 square feet and a city-determined market value of $47.8 million. (Market value is typically about 50% of actual value.) The portfolio has $18 million in debt, borrowed from Signature Bank and Maverick Real Estate Partners. Within the portfolio, the bulk, or 81 percent of the 164,999 square feet of built space are office properties, with elevator properties next occupying 19 percent of the space. They are all located in Manhattan.

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