Sutton Management signs $16.8M refi with Citibank for office in Garment District

Sutton Management through the entity Smc 526 Seventh LLC as borrower signed a refi loan with lender Citibank through the entity Citibank N.A valued at $16.8 million for the office building at 526 Seventh Avenue in the Garment District, Manhattan.
The deal closed on June 9, 2022 and was recorded on June 24, 2022. The prior lender was Citibank which held debt that had an original loan amount of $9.8 million. The property has 21,100 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $796 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 Sutton Management was Ralph I. Sutton. The signatory for Citibank was Scott Detraglia.

Prior sales and revenue

The 21,100-square-foot property generated revenue of $2.9 million or $135 per square foot, according to the most recent income and expense figures.

The property

The 526 7th Avenue parcel has frontage of 22 feet and is 90 feet deep with a total lot size of 2,010 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 $11.1 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 received $3,125 in ECB penalties and $9,360 in OATH penalties 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 Garment District, the majority, or 69 percent of the 53 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 4.1 times the average sales volume among other neighborhoods with $1.1 billion in sales volume in the last two years and is the 9th highest in Manhattan. For development, Garment District has had very little major development activity relative to other neighborhoods.It had 561,900 square feet of commercial and multi-family construction under development in the last two years, which represents 1 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of six of the 26 commercial properties representing 935,407 square feet of the 1,969,736 square feet. The largest owner is Savitt Partners, followed by Handler Real Estate Organization and then MJ Orbach Associates. There are no active new building construction projects on this tax block.

The majority, or 71 percent of the 1.8 million square feet of built space are office buildings, with industrial buildings next occupying 15 percent of the space.

The borrower

The PincusCo database currently indicates that Sutton Management owned at least nine commercial properties with 375,285 square feet and a city-determined market value of $71.8 million. (Market value is typically about 50% of actual value.) The portfolio has $148.9 million in debt, with top three lenders as New York Community Bank, Customers Bank, and Argentic Investment Management respectively. Within the portfolio, the bulk, or 51 percent of the 375,285 square feet of built space are elevator properties, with office properties next occupying 34 percent of the space. The bulk, or 82 percent of the built space, is in Manhattan, with Brooklyn next at 15 percent of the space.

Surrounding

Within a 400-foot radius of 526 7th Avenue, PincusCo identified seven commercial real estate items of interests occurred over the past 24 months.
Of those seven items, two were for major renovation including a certificate of occupancy change. They were two initial temporary certificate of occupancy issuances for projects that initially costed $1.8 million. The most recent of these two items was the temporary certificate of occupancy on October 5, 2020 for a 842,295-square-foot B building with N/A residential units at 498 Seventh Avenue.
One of those seven items was a sale which Joseph Nazar bought the 21,180-square-foot, two-unit office building (O5) on 221 West 37th Street for $15.4 million from Massood-Matt Cohen, Zoheir Aghravi, Mehran Cohen, and Azita Aghravi on June 10, 2022.
Of those seven items, four were loans above $5 million totaling $101.3 million. The most recent of the four was Joseph Nazar which borrowed $8.5 million from Bank Hapoalim secured by the 21,180-square-foot, two-unit office building (O5) on 221 West 37th Street on June 10, 2022.

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