Weihong Hu signs $44M new construction loan with Shanghai Commercial for hotel in Garment District

Weihong Hu through the entity H Hotel LLC as borrower signed a new construction loan with lender Shanghai Commercial Bank valued at $44 million for the hotel building (H2) at 58-60 West 39th Street in the Garment District, Manhattan.
The deal closed on June 8, 2022 and was recorded on June 29, 2022. The prior lender was Shanghai Commercial Bank which held debt that had an original loan amount of $22.5 million. The property has 88,551 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $496 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 owner bought the property on January 8, 2016, for $25.1 million. The signatory for Weihong Hu was Weihong Hu.

The property

The 58-60 West 39th Street parcel has frontage of 42 feet and is 98 feet deep with a total lot size of 4,148 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 $1.2 million.The most recent loan totaled $22.5 million and was provided by Shanghai Commercial Bank on March 3, 2021.

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 10 DOB violations, $20,000 in ECB penalties, and $26,350 in OATH penalties in the last year.

Development

On these lots, there is one active new building construction project for a 173-unit, 62,062-square-foot R-1 building. The project was developed by Wei Hong Hu with plans filed April 20, 2018 and permitted November 30, 2018.

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 hotel buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 10 of the 43 commercial properties representing 1,198,292 square feet of the 2,026,363 square feet. The largest owner is Amazon, followed by Weihong Hu and then Fortuna Realty Group. There are three active new building construction projects totaling 129,337 square feet. The largest is a 173-unit, 62,062-square-foot R-1 building developed by Wei Hong Hu with plans filed April 20, 2018 and permitted November 30, 2018. The second largest is a 176-unit, 56,117-square-foot R-1 building developed by Morris Moinian with plans filed September 5, 2013 and permitted May 25, 2017.

The majority, or 42 percent of the 1.9 million square feet of built space are retail buildings, with office buildings next occupying 34 percent of the space.

The borrower

The PincusCo database currently indicates that Weihong Hu owned at least three commercial properties with 285,978 square feet and a city-determined market value of $58.3 million. (Market value is typically about 50% of actual value.) The portfolio has $22.5 million in debt, borrowed from Shanghai Commercial Bank. Within the portfolio, all identified are hotel properties. The bulk, or 73 percent of the built space, is in Manhattan, with Queens next at 27 percent of the space.

Surrounding

Within a 400-foot radius of 58-60 West 39th Street, Pincusco identified eight commercial real estate items of interests occurred over the past 24 months.
One of those eight items was a sale which Allied Partners bought the 6,211-square-foot, eight-unit mixed-use building (S9) on 45 West 39th Street for $17.9 million from Kenneth Lee on July 21, 2020.
Of those eight items, seven were loans above $5 million totaling $343.4 million. The most recent of the seven was R&B Realty Group which borrowed $52 million from Lightstone Group secured by the 60,931-square-foot, 13-unit office building (O6) on 32 West 39th Street and two other properties on March 16, 2022.

Direct link to Acris document. link