Special servicer files $41M pre-foreclosure suit in Garment District

Special servicer LNR Partners filed a pre-foreclosure suit on behalf of bondholders of COMM 2014-CCRE16, alleging the $41 million loan secured by the office building at 252 West 37th Street in the Garment District in Manhattan, was in a maturity default. The case was filed in New York State Supreme Court on April 2, 2024. The property is owed by Abraham Talassazan’s Eretz Group.

Case 850107/2024 LINK

Court filings represent the position of one party, and are not necessarily accurate or complete. Many borrowers are having trouble with maturity defaults since the values of office and retail properties are generally lower, and interest rates have risen.

According to the complaint filed by special servicer LNR Partners, “On or about December 31, 2013, Cantor Commercial Real Estate Lending, L.P. (“Original Lender”) made a loan to Borrower, in the original principal amount of $41,000,000… Borrower has defaulted under the Note and Mortgage by, among other things, failing to pay the principal, interest and other payments due under the Loan when it matured on January 6, 2024… Accordingly, by letter dated January 8, 2024, Lender notified Borrower of its default.”

The property

The office building in Garment District has 139,629 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 93 feet and is 98 feet deep with a total lot size of 9,131 square feet. The zoning is M1-6 which allows for up to 10 times floor area ratio (FAR) for manufacturing. The city-designated market value for the property in 2022 is $32.6 million.

Prior sales and revenue

This property was sold for $33.7 million on February 28, 2007.

The 139,629-square-foot property generated revenue of $6.1 million or $44 per square foot, according to the most recent income and expense figures.

Development

For the tax lot building, it received its initial certificate of occupancy on November 18, 2015.

Violations and lawsuits

According to city public data, the property has received one DOB violation, $3,680 in ECB penalties, and $6,920 in OATH penalties in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

The neighborhood

In Garment District, The majority, or 69 percent of the 51.8 million square feet of commercial built space are office buildings, with hotel buildings next occupying 12 percent of the space. In sales, Garment District has near average sales volume among other neighborhoods with $472.1 million in sales volume in the last two years and is the 19th highest in Manhattan. For development, Garment District is the 5th most active neighborhood among other neighborhoods. It had 7.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 15 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of seven of the 15 commercial properties representing 2,104,003 square feet of the 2,386,056 square feet. The largest owner is Alram, followed by Brickman and then Faraj Srour. There are no active new building construction projects on this tax block.

The surrounding

Within a 400-foot radius of 258 West 37 Street, PincusCo identified eight commercial real estate items of interests occurred over the past 24 months. Of those eight items, two were sales above $5 million totaling $48.5 million. The most recent of the two was Ouni Mamrout and Meyer Equities which bought the 81,375-square-foot, 12-unit office building (O6) on 260 West 36th Street for $33 million from Albert Monasebian and Nader Hakakian on January 4, 2023. Of those eight items, six were loans above $5 million totaling $153 million. The most recent of the six was Guillermo Silberman and Luciana Silberman Daniels in which borrowed $5 million from Fidelity Bank secured by the 66,073-square-foot, 73-unit office building (O6) on 252 West 38th Street on January 12, 2023.

Direct link to the property’s ACRIS page and link to DOB NOW portal.