Stellar Management signs 99-year ground lease valued at $7M for retail in Little Italy

Stellar Management as tenant through the entity 126 Lessee LLC signed a 99-year ground lease valued at $7 million with landlord DH Realty & Management through the entity Yee Tai Enterprises Corp. for the midblock retail building at 126 Lafayette Street in Little Italy, Manhattan.
The deal closed on April 11, 2022 and was recorded on April 28, 2022.

The property has 18,705 square feet of built space and 12,778 square feet of additional air rights for a total buildable of 31,475 square feet according to PincusCo analysis of city data. The lease price per built square foot is $374 and the price per buildable square foot is $222 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 DH Realty & Management was Stephen Cheung. The signatory for Stellar Management was Ryan Jackson. This is a 99-year ground lease. Stellar Management is located at the same address as lessee’s LLC. DH Realty & Management is located at the same address as landlord LLC.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Stellar Management had purchased any other properties and sold seven properties in three transactions for a total of $33.4 million over the past 24 months.
The seller DH Realty & Management had not purchased any other properties and had not sold any properties over the same time period. The 18,705-square-foot property generated revenue of $804,328 or $43 per square foot, according to the most recent income and expense figures.

The property

The 126 Lafayette Street parcel has frontage of 74 feet and is 89 feet deep with a total lot size of 6,295 square feet. The lot is irregular. The zoning is M1-5B which allows for up to 5 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $3.4 million.

Violations and lawsuits

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

Development

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 Little Italy, the bulk, or 31 percent of the 4.4 million square feet of commercial built space are office buildings, with residential walkup buildings next occupying 24 percent of the space. In sales, Little Italy has had very little sales volume relative to other neighborhoods with $174.7 million in sales volume in the last two years. For development, Little Italy has had very little major development activity relative to other neighborhoods.It had 82,921 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 was one pre-foreclosure suit filed among other retail buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of four of the 24 commercial properties representing 160,947 square feet of the 467,365 square feet. The largest owner is HCRE Hung & Chong Real Estate, followed by Chetrit Group and then Javeri Capital. There are no active new building construction projects on this tax block.

The majority, or 44 percent of the 437,802 square feet of built space are office buildings, with hotel buildings next occupying 28 percent of the space.

The buyer

The PincusCo database currently indicates that Stellar Management owned at least 60 commercial properties with 7,876,177 square feet and a city-determined market value of $1.3 billion. (Market value is typically about 50% of actual value.) The portfolio has $1.8 billion in debt, with top three lenders as Goldman Sachs, New York Community Bank, and Signature Bank respectively. Within the portfolio, the bulk, or 76 percent of the 7,876,177 square feet of built space are residential elevator properties, with office properties next occupying 11 percent of the space. The bulk, or 79 percent of the built space, is in Manhattan, with Bronx next at 15 percent of the space.

Surrounding

Within a 400-foot radius of 126 Lafayette Street, PincusCo identified 10 commercial real estate items of interests occurred over the past 24 months.
Of those 10 items, two were for major renovation including a certificate of occupancy change. They were two permits with a total initial cost of $1 million. The most recent of these two items was the permit on December 18, 2020 for a 6,502-square-foot B building with one residential units at 274 Canal Street.
Of those 10 items, three were sales above $5 million totaling $49 million. The most recent of the three was Betesh Co. which bought the 20,475-square-foot, five-unit office building (O6) on 412 Broadway for $16 million from Lucile H. Jarvis on February 28, 2022.
Of those 10 items, five were loans above $5 million totaling $112.9 million. The most recent of the five was Cape Advisors which borrowed $43.5 million from Morgan Stanley secured by the 53,200-square-foot, 50-unit office building (O5) on 22 Howard Street on December 16, 2021.

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