Wharton Properties signs $60M refi with Bank of China for retail in Hell’s Kitchen

Wharton Properties through the entity 42nd & 8th Owner LLC as borrower signed a refi loan with lender Bank of China through the entity Bank Of China, New York Branch valued at $60 million for the retail building at 661 8th Avenue in Hell’s Kitchen, Manhattan.
The deal closed on May 23, 2022 and was recorded on June 10, 2022. The prior lender was Bank of China which held debt that had an original loan amount of $60 million.The property has 12,905 square feet of built space and 47,435 square feet of additional air rights for a total buildable of 60,350 square feet according to PincusCo analysis of city data. The loan price per built square foot is $4,649 and the price per buildable square foot is $994 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 July 25, 2005, for $27 million. The signatory for Wharton Properties was Jeff Sutton. The signatory for Bank of China was Bradley D. Berkley. Jeff Sutton is the founder of Wharton Properties. 

Prior sales and revenue

The 12,905-square-foot property generated revenue of $7 million or $539 per square foot, according to the most recent income and expense figures.

The property

The 661 8th Avenue parcel has frontage of 80 feet and is 75 feet deep with a total lot size of 6,035 square feet. The zoning is C6-4 which allows for up to 10 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $37.4 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 received $624 in ECB penalties and $1,374 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on July 27, 2012. 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 Hell’s Kitchen, the bulk, or 39 percent of the 45 million square feet of commercial built space are residential elevator buildings, with specialty buildings next occupying 17 percent of the space. In sales, Hell’s Kitchen has 3.5 times the average sales volume among other neighborhoods with $972.1 million in sales volume in the last two years and is the 13th highest in Manhattan. For development, Hell’s Kitchen has 1.3 times the average amount of major developments relative to other neighborhoods and is the 18th highest in Manhattan. It had 1.2 million square feet of commercial and multi-family construction under development in the last two years, which represents 3 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 six of the 19 commercial properties representing 340,781 square feet of the 824,831 square feet. The largest owner is Brodsky Organization, followed by Taconic Partners. There is one active new building construction project totaling 294,761 square feet. It is a 321-unit, 294,761-square-foot R-2 building developed by Colleen Wenke with plans filed March 9, 2020 and it has not been permitted yet.

The majority, or 56 percent of the 971,437 square feet of built space are residential elevator buildings, with office buildings next occupying 19 percent of the space.

Surrounding

Within a 400-foot radius of 661 8th Avenue, PincusCo identified four commercial real estate items of interests occurred over the past 24 months.
Of those four items, one was in new building development. It was a new building permit issued on May 24, 2022 for a 294,761-square-foot R-2 building with 321 residential units at 312 West 43rd Street.
One of those four items was a sale which Taconic Partners bought the 9,203-square-foot, 15-unit rental (C7) on 319 West 42nd Street and two other properties for $5.5 million from Nathan Z. Korn on December 28, 2020.
Of those four items, two were loans above $5 million totaling $354 million. The most recent of the two was Taconic Partners which borrowed $204 million from Union Labor Life Insurance Company secured by the 62,416-square-foot, one-unit office building (O3) on 305 West 42nd Street and one other property on December 16, 2021.

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