ZG Capital, Rialto, pays $102.5M to MEK for office building in Midtown East, last sold for $120M

ZG Capital Partners and Rialto Capital Management through the entity Park 53rd Owner LLC paid $102.5 million to MEK Management Services through the entity Mikeone Ek East 53, LLC for office building (O9) at 43 East 53rd Street in Midtown East, Manhattan.
The deal closed on July 15, 2022 and was recorded on July 28, 2022. The property has 112,933 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $907 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 May 26, 2015, for $120.3 million. The signatory for MEK Management Services was Richard Ostrovsky. The signatory for ZG Capital Partners and Rialto Capital Management was James Tamborlane. Bobby Zar and James Tamborlane are partners in ZG Capital. The New York Post first reported the sale in contract and that the brokers were Newmark’s Jordan Roeschlaub and Dustin Stolly.  Richard Ostrovksy is president of MEK.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer ZG Capital Partners purchased three properties in two transactions for a total of $49.2 million and has no record it sold any properties over the past 24 months.
The seller MEK Management Services had not purchased any other properties and had not sold any properties over the same time period. The 112,933-square-foot property generated revenue of $6.9 million or $61 per square foot, according to the most recent income and expense figures.

The property

The 43 East 53rd Street parcel has frontage of 80 feet and is 100 feet deep with a total lot size of 8,033 square feet. The zoning is C5-2.5 which allows for up to 12 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $52.8 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 not received any significant violations 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 Midtown East, the majority, or 82 percent of the 61.5 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 4.2 times the average sales volume among other neighborhoods with $1.4 billion in sales volume in the last two years and is the 9th highest in Manhattan. For development, Midtown East is the most active neighborhood among other neighborhoods. It had 12.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 20 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of eight of the 22 commercial properties representing 1,464,268 square feet of the 2,302,217 square feet. The largest owner is Tishman Speyer, followed by Korein family and then Shvo. There are no active new building construction projects on this tax block.

The majority, or 89 percent of the 2.2 million square feet of built space are office buildings, with retail buildings next occupying 6 percent of the space.

The buyer

The PincusCo database currently indicates that ZG Capital Partners owned at least three commercial properties in New York City with 439,656 square feet and a city-determined market value of $108.7 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 83 percent of the 439,656 square feet of built space are office properties, with retail properties next occupying 13 percent of the space. They are all located in Manhattan.
The PincusCo database currently indicates that Rialto Capital Management owned at least one commercial property in New York City with 5,880 square feet and a city-determined market value of $1.1 million. (Market value is typically about 50% of actual value.) The portfolio has $5 million in debt, borrowed from Signature Bank. The portfolio consists of at least a single walkup property. It is located in Brooklyn.

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