Slate, RiseBoro pay $64M to McSam Hotel for hotel near JFK, get $152M construction loan

Slate Property Group and RiseBoro Community Partnership through the entity Rb 135th Avenue Owner LLC paid $64 million to McSam Hotel Group through the entity Jfk Hotel Partners LLC for the hotel building (H3) at 144-02 135th Avenue in South Ozone Park, Queens, near John F. Kennedy International Airport.

To finance the purchase and repositioning of the hotel into 318 residential units, Slate Property Group and RiseBoro Community Partnership through the entity RB 135th Avenue Owner LLC as borrower signed a construction loan with lender NYC Housing Development Corporation and NYS Housing Finance Agency valued at $152.4 million.

The deal closed on December 14, 2023 and was recorded on January 16, 2024. The property has 206,936 square feet of built space and 107,260 square feet of additional air rights for a total buildable of 314,026 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $309 and the price per buildable square foot is $203 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 McSam Hotel Group was Sam Chang. The signatory for Slate Property Group and RiseBoro Community Partnership was Emily Kurtz, vice president of housing at RiseBoro. The contract date was March 1, 2022. This is for the “adaptive reuse” of a hotel into a 318-unit residential building. The sale was reported here.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Slate Property Group purchased 10 properties in nine transactions for a total of $337.5 million and sold four properties in four transactions for a total of $45.1 million over the past 24 months.
The seller McSam Hotel Group had not purchased any other properties and sold eight properties in seven transactions for a total of $681.3 million over the same time period. The former owners according to the Department of Housing Preservation and Development includes Sam Chang, head officer and Rob Pena, site manager. The business entity is JFK Hotel Partners Llc. The 206,936-square-foot property generated revenue of $24.3 million or $118 per square foot, according to the most recent income and expense figures.

The property

The hotel building in South Ozone Park has 206,936 square feet of built space and 107,260 square feet of additional air rights for a total buildable of 314,026 square feet according to a PincusCo analysis of city data. The parcel has frontage of zero feet and is zero feet deep with a total lot size of 129,229 square feet. The lot is irregular. The zoning is C4-2 which allows for up to 3.4 times floor area ratio (FAR) for commercial and up to 2.43 times FAR for residential. The city-designated market value for the property in 2022 is $43.2 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 received two DOB violations, $625 in ECB penalties, and $625 in OATH penalties in the last year.

Development

On the lot, there are four active new building construction projects and major alteration projects with initial costs more than $5 million, totaling 534,448 square feet. The largest is a major alteration project for a 318-unit, 413,026 square-foot R-2 building submitted by Emily Kurtz with plans filed May 18, 2023 and it has not been permitted yet. The second largest is a new building project for a 360-unit, 160,551 square-foot R-1 building submitted by Chartwell Hospitality and filed by Robert Schaedle Iii with plans filed December 8, 2015 and permitted November 8, 2018.

The neighborhood

In South Ozone Park, The bulk, or 27 percent of the 6.3 million square feet of commercial built space are mixed-use buildings, with specialty buildings next occupying 26 percent of the space. In sales, South Ozone Park has had very little sales volume relative to other neighborhoods with $132.5 million in sales volume in the last two years. For development, South Ozone Park has had very little major development activity relative to other neighborhoods.It had 426,011 square feet of commercial and multi-family construction under development in the last two years, which represents 7 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of five of the six commercial properties representing 441,152 square feet of the 648,088 square feet. The largest owner is Soundview Real Estate Partners, followed by Ronnie Gross and then Consolidated Edison.
On the tax block, there were five new building construction projects totaling 628,369 square feet. The largest is a 360-unit, 162,504 square-foot hotel/dormitory/shelter (R-1) building submitted by Chartwell Hospitality and filed by Robert Schaedle III with plans filed December 8, 2015 and permitted April 9, 2019. The second largest is a 360-unit, 160,551 square-foot hotel (R-1) building submitted by Chartwell Hospitality and filed by Robert Schaedle III with plans filed December 8, 2015 and permitted August 2, 2018.

The majority, or 100 percent of the 648,088 square feet of built space are hotel buildings, with specialty buildings next occupying 0 percent of the space.

The seller

The PincusCo database currently indicates that McSam Hotel Group owned at least 20 commercial properties in New York City with 1,147,084 square feet and a city-determined market value of $263.5 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 96 percent of the 1,147,084 square feet of built space are hotel properties, with industrial properties next occupying 3 percent of the space. The bulk, or 77 percent of the built space, is in Manhattan, with Queens next at 23 percent of the space.

The buyer

The PincusCo database currently indicates that RiseBoro Community Partnership owned at least 118 commercial properties with 2,960 residential units in New York City with 2,809,150 square feet and a city-determined market value of $254.8 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 38 percent of the 2,809,150 square feet of built space are elevator properties, with D6 properties next occupying 38 percent of the space. The bulk, or 56 percent of the built space, is in Brooklyn, with Queens next at 38 percent of the space.
The PincusCo database currently indicates that Slate Property Group owned at least 50 commercial properties with 2,528 residential units in New York City with 2,561,810 square feet and a city-determined market value of $675.9 million. (Market value is typically about 50% of actual value.) The portfolio has $1.2 billion in debt, with top three lenders as Mack Real Estate Group, Signature Bank, and PCCP respectively. Within the portfolio, the bulk, or 83 percent of the 2,561,810 square feet of built space are elevator properties, with walkup properties next occupying 12 percent of the space. The bulk, or 65 percent of the built space, is in Manhattan, with Brooklyn next at 17 percent of the space.

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