SL Green, Wharton Properties, buy $101M note secured by Wharton Properties 34th Street retail

SL Green Realty and Jeff Sutton’s Wharton Properties through the entity 21 West 34 Lender LLC bought a note with an original principal of $101 million from Blackstone Group secured by Wharton Properties’s retail building (K2) at 21 West 34th Street in Garment District, Manhattan. Signature Bank provided the original $101 million loan in December 2016. Blackstone Group bought a portion of Signature Bank’s portfolio including this loan, in December 2023, after the Federal Deposit Insurance Corporation was appointed receiver of the insolvent Signature Bank.
The deal closed on June 14, 2024 and was recorded on July 12, 2024. The prior lender was Blackstone Group which held debt that had an original loan amount of $101 million.The property has 19,054 square feet of built space.
Sutton bought the property July 11, 2005. for $20 million.

The property

The retail building in Garment District has 19,054 square feet of built space and 25,245 square feet of additional air rights for a total buildable of 44,290 square feet according to a PincusCo analysis of city data. The parcel has frontage of 50 feet and is 98 feet deep with a total lot size of 4,429 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 city-designated market value for the property in 2022 is $54.6 million.

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 not received any significant violations in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on June 10, 2014. 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 2.1 times the average sales volume among other neighborhoods with $542.4 million in sales volume in the last two years and is the 16th 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.

The block

On this tax block, PincusCo has identified the owners of 12 of the 16 commercial properties representing 1,309,345 square feet of the 1,462,940 square feet. The largest owner is Wharton Properties, followed by Vornado Realty Trust and then Vlash Pepa.
On the tax block, there was one new building construction project filed totaling 173,835 square feet. It is a 363-unit, 173,835 square-foot hotel/dormitory/shelter (R-1) building submitted by Wharton Properties and filed by Andrew Lester with plans filed April 29, 2021 and it has not been permitted yet.

The majority, or 92 percent of the 1.5 million square feet of built space are office buildings, with hotel buildings next occupying 4 percent of the space.

The borrower

The PincusCo database currently indicates that Wharton Properties owned at least 85 commercial properties with 212 residential units in New York City with 3,328,416 square feet and a city-determined market value of $1.6 billion. (Market value is typically about 50% of actual value.) The portfolio has $243.8 million in debt, with top three lenders as Valley National Bank, Bank of China, and Provident Bank respectively. Within the portfolio, the bulk, or 68 percent of the 3,328,416 square feet of built space are office properties, with retail properties next occupying 20 percent of the space. The bulk, or 85 percent of the built space, is in Manhattan, with Brooklyn next at 11 percent of the space.

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