Spear Street pays $52M to KPG for retail in SoHo, just above $51M 2022 loan

San Francisco-based Spear Street Capital through the entity 446 Broadway Property Owner LLC paid $52 million to KPG Funds through the entity 446 Broadway Owner LLC for the retail building (O5) at 446 Broadway in SoHo, Manhattan. The expected use is cash flowing. This is the second SoHo property Spear Street Capital has purchased from KPG Funds in the past year.
The deal closed on September 17, 2024 and was recorded on September 25, 2024. The property has 27,000 square feet of built space and 3,656 square feet of additional air rights for a total buildable of 29,975 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $1,925 and the price per buildable square foot is $1,734 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 seller bought the property on August 16, 2018, for $46.8 million. The signatory for KPG Funds was Gregory Kraut. The signatory for Spear Street Capital was John Grassi. The contract date was June 27, 2024. The outstanding maximum principal was $51 million through a refinance in early 2022.

The new loan document says, “After giving effect to a principal prepayment of the loan,” $31.2 million remained, and simultaneously $1.75 million of new debt was added. Spear Street Capital assumed the $31.2 million debt and added $1.75 million, for a total acquisition loan of $32.95 million.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Spear Street Capital purchased one property in one transaction for a total of $48.1 million at 2 Crosby Street, and has no record it sold any properties over the past 24 months.
The seller KPG Funds had not purchased any other properties and sold one property in one transaction for a total of $48.1 million over the same time period.

The property

The retail building in SoHo has 27,000 square feet of built space and 3,656 square feet of additional air rights for a total buildable of 29,975 square feet according to a PincusCo analysis of city data. The parcel has frontage of 50 feet and is 120 feet deep with a total lot size of 5,995 square feet. The lot is irregular. The property is in the SoHo-Cast Iron Historic District. The city-designated market value for the property in 2022 is $11.2 million. The most recent loan totaled $51 million and was provided by Ladder Capital on March 7, 2022.

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 in the last year.

Development

On the lot, there is one active major alteration construction project, 121204927, for a 26,313 square-foot B building. The project was submitted by Rod Kritsberg with plans filed March 8, 2019 and permitted January 29, 2020.

The block

On this tax block, PincusCo has identified the owners of five of the 11 commercial properties representing 128,270 square feet of the 230,963 square feet. The largest owner is Tokyo Trust Capital, followed by Spear Street Capital and then Kpg Funds.
There are no active new building construction projects on this tax block.

The majority, or 67 percent of the 230,963 square feet of built space are office buildings, with retail buildings next occupying 21 percent of the space.

The seller

The PincusCo database currently indicates that Kpg Funds owned at least three commercial properties with one residential unit in New York City with 129,211 square feet and a city-determined market value of $60.3 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 43 percent of the 129,211 square feet of built space are retail properties, with specialty properties next occupying 37 percent of the space. They are all located in Manhattan.

The buyer

The PincusCo database currently indicates that Spear Street Capital owned at least three commercial properties in New York City with 256,570 square feet and a city-determined market value of $134.9 million. (Market value is typically about 50% of actual value.) The portfolio has $233.9 million in debt, borrowed from Bank of America and Voya Investment Management. Within the portfolio, the bulk, or 70 percent of the 256,570 square feet of built space are office properties, with retail properties next occupying 30 percent of the space. They are all located in Manhattan.

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