Yellowstone Real Estate signs $60M loan for Times Square office acquired through deed-in-lieu

Yellowstone Real Estate Investments through the entity YS 220w42 Holdings LLC as borrower signed an initial loan with lender Bank Hapoalim valued at $60 million for the office building (O4) at 220 West 42nd Street, also known as 221 West 41st Street, in Times Square, Manhattan. Yellowstone acquired the building from EPIC through a deed-in-lieu of foreclosure after buying the distressed note.
The loan closed on September 9, 2022 and was recorded on September 20, 2022. The prior lender was M&T Bank which held debt that had an original loan amount of $150 million. The property has 235,300 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $254 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 acquired the property on March 17, 2022, with a valuation of $161.1 million. The signatory for Yellowstone Real Estate Investments was Isaac Hera.

Prior sales and revenue

The 235,300-square-foot property generated revenue of $16.2 million or $69 per square foot, according to the most recent income and expense figures.

The property

The 221 West 41st Street parcel has frontage of 77 feet and is 197 feet deep with a total lot size of 10,109 square feet. The lot is irregular. The zoning is C6-7 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 $196.7 million.The most recent loan totaled 0.0 and was provided by Yellowstone Real Estate Investments on November 15, 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 $350 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 70 percent of the 51.9 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 2.8 times the average sales volume among other neighborhoods with $938.2 million in sales volume in the last two years and is the 15th highest in Manhattan. For development, Garment District has 1.6 times the average amount of major developments relative to other neighborhoods and is the 16th highest in Manhattan. It had 1.5 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 were two 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 three of the 10 commercial properties representing 1,635,659 square feet of the 3,013,927 square feet. The largest owner is RXR Realty, followed by Yellowstone Real Estate Investments and then Torchlight Investors.
There are no active new building construction projects on this tax block.

The majority, or 69 percent of the 1.9 million square feet of built space are office buildings, with specialty buildings next occupying 15 percent of the space.

The borrower

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 $258.2 million. (Market value is typically about 50% of actual value.) The portfolio has $90 million in debt, borrowed from BVK. 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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