Sloan Kettering pays $185M to Joy Construction for office building in Lenox Hill

Memorial Sloan Kettering through the entity S.K.I. Realty, Inc. paid $185 million to Joy Construction through the entity Yyy 62nd Street LLC for office condo at 328 East 62nd Street, also known as 321 East 61st Street, in Lenox Hill, Manhattan.
The deal closed on August 30, 2022 and was recorded on September 13, 2022. The eight condo units have 79,394 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $2,330 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 Joy Construction was Eli S. Weiss. The signatory for Memorial Sloan Kettering was Michael Harrington. This is a purpose-built structure Joy Construction and Maddd Equities developed for Memorial Sloan Kettering as a long-term lease tenant. The Real Deal reported on this yesterday. The developers bought the land for $21 million.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 321 East 61st Street.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Memorial Sloan Kettering signed a contract to pay $300 million for a portion of the Lipstick Building and has no record it sold any properties over the past 24 months.
The seller Joy Construction had not purchased any other properties and sold two properties in one transactions for a total of $33.2 million over the same time period.

The property

The 321 East 61st Street parcel has a total lot size of 11,656 square feet. The city-designated market value for the property in 2022 is $4.4 million.The most recent loan totaled $130 million and was provided by Natixis on December 6, 2019.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties since September of 2020. In addition, according to city public data, the properties have not received any significant violations in the last year.

Development

For the tax lot buildings, one out of the eight buildings received a initial certificate of occupancy in the last ten years. 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 Lenox Hill, the bulk, or 35 percent of the 51.9 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 28 percent of the space. In sales, Lenox Hill has the highest sale turnover among other neighborhoods in the city with $3.2 billion in sales volume in the last two years. For development, Lenox Hill has 1.2 times the average amount of major developments relative to other neighborhoods and is the 23rd highest in Manhattan. It had 1.3 million 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. There were two pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On the tax block of 321 East 61st Street, PincusCo has identified the owners of 18 of the 33 commercial properties representing 265,753 square feet of the 583,193 square feet. The largest owner is Maddd Equities, followed by Gatsby Enterprises and then Atlantic Development Group.
There are two active new building construction projects totaling 70,972 square feet. The largest is a 69,647-square-foot B building developed by Jorge Madruga with plans filed September 3, 2015 and permitted December 22, 2017.

The majority, or 41 percent of the 393,157 square feet of built space are walkup buildings, with industrial buildings next occupying 27 percent of the space.

The seller

The PincusCo database currently indicates that Joy Construction owned at least four commercial properties in New York City with 292,914 square feet and a city-determined market value of $68.8 million. (Market value is typically about 50% of actual value.) The portfolio has $127 million in debt, borrowed from Natixis and Bank Leumi. Within the portfolio, the bulk, or 61 percent of the 292,914 square feet of built space are elevator properties, with industrial properties next occupying 39 percent of the space. The bulk, or 61 percent of the built space, is in Manhattan, with Brooklyn next at 39 percent of the space.

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