Yellowstone pays $185.9M to Blackstone for office in Midtown West

Yellowstone Real Estate Investments through the entity YS 1740 Broadway Owner LLC paid $185.9 million to Blackstone Group through the entity Bre 1740 Broadway LLC for the office building (O4) at 1740 Broadway in Midtown West, Manhattan.
The deal closed on April 19, 2024 and was recorded on April 24, 2024. The property has 519,600 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $357 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 seller bought the property on December 18, 2014, for $600.9 million. The signatory for Blackstone Group was Tim Geiman. The signatory for Yellowstone Real Estate Investments was Isaac Hera. The contract date was April 19, 2024.

The Commercial Observer and later others reported last week that Yellowstone bought the debt for an undisclosed amount under $200 million.

The property records do no reflect a debt sale, and the mortgage discharge says the mortgage was paid off and not assigned prior to payoff. The Commercial Observer also reported Yellowstone is considering a residential conversion of the property.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Yellowstone Real Estate Investments had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Blackstone Group purchased 20 properties in eight transactions for a total of $1.3 billion and sold 12 properties in two transactions for a total of $462.4 million over the same time period.

The property

The office building in Midtown West has 519,600 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 207 feet and is 172 feet deep with a total lot size of 29,505 square feet. The lot is irregular. The zoning is C6-6 which allows for up to 15 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 $253 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has received $4,675 in OATH penalties in the last year.

Development

On the lot, there is one active major alteration construction project for a 519,600 square-foot B building. The project was submitted by Jeff Young with plans filed December 4, 2018 and permitted September 23, 2019.

The neighborhood

In Midtown West, The majority, or 75 percent of the 75.9 million square feet of commercial built space are office buildings, with hotel buildings next occupying 14 percent of the space. In sales, Midtown West has the 3rd highest sale turnover among other neighborhoods in the city with $2.6 billion in sales volume in the last two years. For development, Midtown West is the most active neighborhood among other neighborhoods. It had 26.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 35 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 seven of the 20 commercial properties representing 105,941 square feet of the 723,648 square feet. The largest owner is Thomas Tseming Young, followed by James T. Kim and then East West Realty.
There are no active new building construction projects on this tax block.

The majority, or 81 percent of the 723,648 square feet of built space are office buildings, with hotel buildings next occupying 6 percent of the space.

The seller

The PincusCo database currently indicates that Blackstone Group owned at least 61 commercial properties with 14,221 residential units in New York City with 17,439,138 square feet and a city-determined market value of $3.2 billion. (Market value is typically about 50% of actual value.) The portfolio has $1.6 billion in debt, with top three lenders as Morgan Stanley, Wells Fargo, and New York Life Insurance Company respectively. Within the portfolio, the bulk, or 88 percent of the 17,439,138 square feet of built space are elevator properties, with industrial properties next occupying 6 percent of the space. The bulk, or 81 percent of the built space, is in Manhattan, with Queens next at 15 percent of the space.

The buyer

The PincusCo database currently indicates that Yellowstone Real Estate Investments owned at least two commercial properties in New York City with 676,647 square feet and a city-determined market value of $173.3 million. (Market value is typically about 50% of actual value.) The portfolio has $150 million in debt, borrowed from BVK and Bank Hapoalim. Within the portfolio, the bulk, or 65 percent of the 676,647 square feet of built space are hotel properties, with office properties next occupying 35 percent of the space. They are all located in Manhattan.

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