Yellowstone signs $90M loan with Fortress for hotel in Midtown East

Yellowstone Real Estate Investments through the entity YS 541 Lexington Owner LLC as borrower signed an acquisition loan with lender Fortress Investment Group through the entity Fortress Credit Corp. valued at $90 million for the hotel building (H1) at 541 Lexington Avenue in Midtown East, Manhattan.
Yellowstone acquired the building through a $140 million credit bid at an October 2024 New York State Supreme Court auction for index number 653461/2022.
PincusCo reported in October that Yellowstone won the auction with a credit bid, for the asset with a judgment of $234 million. Howard W. Kingsley was the referee.

The former owners in the foreclosure action were affiliates of Dune Real Estate Partners and Aynsley Capital, according to court records.

The loan closed on November 26, 2024 and was recorded on December 5, 2024. The prior lender was Fortress Investment Group which held debt that had an original loan amount of $170 million. The property has 317,496 square feet of built space according to a PincusCo analysis of city data. The loan price per built square foot is $283 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 Yellowstone Real Estate Investments was Tsach I. Hera. The signatory for Fortress Investment Group was Avraham Dryfuss.

The property

The hotel building in Midtown East has 317,496 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 200 feet and is 126 feet deep with a total lot size of 24,725 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 $101.5 million. The most recent loan totaled 0.0 and was provided by Yellowstone Real Estate Investments on March 9, 2022.

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 two DOB violations, $1,250 in ECB penalties, and $10,750 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 $1 million on this tax lot.

The neighborhood

In Midtown East, The majority, or 81 percent of the 62.6 million square feet of commercial built space are office buildings, with hotel buildings next occupying 7 percent of the space. In sales, Midtown East has the 4th highest sale turnover among other neighborhoods in the city with $2.3 billion in sales volume in the last two years. For development, Midtown East is the 2nd most active neighborhood among other neighborhoods. It had 16.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 27 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of two of the six commercial properties representing 436,961 square feet of the 1,005,331 square feet. The two identified owners are Capstone Equities and 12.18. Investment Management.
On the tax block, there was one new building construction project filed totaling 216,171 square feet. It is a 124-unit, 216,171 square-foot residential (R-2) building submitted by Ceruzzi Properties and filed by Kenneth Cartelli with plans filed June 16, 2014 and permitted April 7, 2016.

The majority, or 52 percent of the 1 million square feet of built space are office buildings, with hotel buildings next occupying 47 percent of the space.

The borrower

The PincusCo database currently indicates that Yellowstone Real Estate Investments owned at least three commercial properties in New York City with 1,196,247 square feet and a city-determined market value of $426.4 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 63 percent of the 1,196,247 square feet of built space are office properties, with hotel properties next occupying 37 percent of the space. They are all located in Manhattan.

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