Zar Group signs $71M refi loan with Goldman Sachs for two properties in Mott Haven

UPDATED WITH CORRECTION: Zar Group through the entity Bruckner III LLC as borrower signed a refi loan with lender Goldman Sachs valued at $71 million for two properties including the office building at 2417 3rd Avenue in Mott Haven, Bronx and midblock development building at 2415 3rd Avenue in Mott Haven, Bronx.
The deal closed on March 25, 2022 and was recorded on April 11, 2022. The prior lender was Ladder Capital which held debt that had an original loan amount of $44.8 million.The two properties have 154,380 square feet of built space and 26,488 square feet of additional air rights according to PincusCo analysis of city data. The loan price per built square foot is $459 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 Zar Group was Babak Zar. The signatory for Goldman Sachs was Josh Clary.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 2417 3rd Avenue.

The property

The 2417 3rd Avenue parcel has frontage of 226 feet and is 88 feet deep with a total lot size of 19,888 square feet. The zoning is M1-3/R8 which allows for up to 5 times floor area ratio (FAR) for manufacturing and up to 6.02 times FAR for residential. The city-designated market value for the property in 2022 is $19.4 million.The most recent loan totaled $44.8 million and was provided by Ladder Capital on December 20, 2019.

Violations and lawsuits

The properties were not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the properties have received one DOB violation and $6,000 in OATH penalties in the last year.

The neighborhood

In Mott Haven, the bulk, or 38 percent of the 43.4 million square feet of commercial built space are residential elevator buildings, with industrial buildings next occupying 23 percent of the space. In sales, Mott Haven has 2.7 times the average sales volume among other neighborhoods with $744 million in sales volume in the last two years and is the highest in Bronx. For development, Mott Haven is the 7th most active neighborhood among other neighborhoods. It had 4.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 10 percent of the neighborhood’s built space.

The block

On the tax block of 2417 3rd Avenue, PincusCo has identified the owners of 12 of the 16 commercial properties representing 1,281,206 square feet of the 1,428,677 square feet. The largest owner is Cheskel Schwimmer, followed by CubeSmart and then ZG Capital Partners. There are five active new building construction projects totaling 1,372,422 square feet. The largest is a 458-unit, 364,274-square-foot R-2 building developed by Dan Berger with plans filed September 3, 2015 and permitted June 9, 2020. The second largest is a 213-unit, 315,859-square-foot R-2 building developed by Cheskel Schwimmer with plans filed February 20, 2019 and it has not been permitted yet.

The majority, or 66 percent of the 1.4 million square feet of built space are residential elevator buildings, with industrial buildings next occupying 20 percent of the space.

Surrounding

Within a 400-foot radius of 2417 3rd Avenue, Pincusco identified 12 commercial real estate items of interests occurred over the past 24 months.
Of those 12 items, four were in new building development. There were four new building permits. The most recent of these four items was a permit on October 28, 2021 for a 165,391-square-foot R-2 building with 200 residential units at 2413 Third Avenue.
Of those 12 items, two were for major renovation including a certificate of occupancy change. They were two permit applications with a total initial cost of $3.4 million. The most recent of these two items was the filing on October 4, 2021 for a 32,823-square-foot M building with zero residential units at 2403 3rd Avenue.
Of those 12 items, two were sales above $5 million totaling $34.5 million. The most recent of the two was RXR Realty which bought the 0-square-foot industrial (G7) on EAST 134th Street and one other property for $23.7 million from Somerset Partners on March 20, 2020.
Of those 12 items, four were loans above $5 million totaling $518.2 million. The most recent of the four was Artimus which borrowed $90 million from Bank Leumi secured by the 0-square-foot development site (V1) on 2457 3rd Avenue and two other properties on September 14, 2021.

Correction: An earlier post identified the owner as Zar Property NY. However, the owner is Zar Group.

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