Download pdf - 272-276 West 86th Street Exclusive Offering Memorandum

Exclusive Offering Memorandum

272-276 West 86th StreetFirst Mortgage

Real estate investment services

272-276 WEST 86TH STREET, NEW YORK, NY SECTION TITLE

Real estate investment services272-276 WEST 86TH STREET, NEW YORK, NY

PAGE 03

Exclusive Offering Memorandum

272-276 West 86th StreetFirst Mortgage

Eastern Consolidated

355 Lexington Avenue

New York, NY 10017

Telephone 212.499.7700

Facsimile 212.499.7718

[email protected]

Peter Hauspurg Chairman & CEO

[email protected]

212.499.7700

Samuel Schneider Director

[email protected]

646.658.7356

Daniel Glaser Director

[email protected]

646.658.7357

Jared R. Toothman Associate Director, Financial Services

[email protected]

646.658.7305

Senior Acquisition Loan

in Foreclosure

Secured by Three 5-Story Walk-up

Apartment Buildings


PAGE 04

Contents

05

07

08

Executive Summary

Plot Plan

Survey

09 Loan Summary

10 Zoning Opinion

15 Property Detail

17 Rent Rolls

18 Location Description

19 Confi dentiality/Disclaimer


PAGE 05

Executive Summary

Eastern Consolidated is the exclusive agent in the sale of the $25,053,750 par-value fi rst mortgage

(the “Loan”) secured by three adjacent 5-story walk-up apartment buildings located at 272‐276 West

86th Street (the “Properties”) in the Upper West Side neighborhood of Manhattan. The Loan proceeds

were used to refi nance 272 West 86th Street (“272”), acquire 274 West 86th Street (“274”) and 276

West 86th Street (“276”), and fund tenant buyouts and pre-development costs.

Address 272-276 West 86th Street, New York, NY 10024

Location The Properties are located on the south side of West 86th Street, mid‐block between Broadway and West

End Avenue

Block & Lot 1233 / 58,59,157

Description Street

Number

272

274

276

Total

Block 1233

Lot Number

157

58

59

Lot

Dimensions

20’ x 102’

20’ x 102’

20’ x 102’

60’ x 102’

Lot

Sq. Ft.

2,043

2,043

2,043

6,129

Existing

Gross SF

6,215

6,215

6,215

18,645

As-of-Right

Zoning Floor Area

20,430

20,430

20,430

61,290

Existing

Air Rights

14,215

14,215

14,215

42,645

Street Smart Realty (the “Sponsor”) planned to demolish 272 and 274 and combine the air rights from

the three lots to develop an 18-story luxury condominium tower totaling 53,785 gross square feet (refer

to Zoning Opinion section). 276 was to remain a rental property to facilitate the relocation of tenants from

274.

The Sponsor proposed numerous development schemes throughout 2007 and early 2008 before default-

ing on the Loan. Petra Mortgage Capital Corp. (the “Lender”) initiated foreclosure proceedings in early

2009 and has received summary judgment, however the Sponsor has fi led an appeal to the summary

judgment.

Each fi ve-story walk-up contains 10 units, for a total of 30 units. 272 and 276 will be delivered vacant.

Three rent stabilized apartments and one apartment believed to be deregulated remain in 274. The com-

mercial tenant in 274, a dog grooming business that occupies the basement and ground fl oor, sued the

Sponsor for defaulting on a buyout agreement and has placed a lien on 274. Per the Lender, the lien

should be removed by the foreclosure proceeding. However, the tenant contends it is entitled to operate

rent-free until the Sponsor delivers the buyout payment.

It appears the Sponsor did not fi le unit registrations with the Department of Housing and Community

Renewal for 2008. The Lender cannot obtain DHCR records without title. Documents related to the rental

apartments as well as the tenant and foreclosure lawsuits are public information and prospective purchas-

ers are advised to conduct thorough due diligence.


PAGE 06

Zoning The R10A zone has a maximum as-of-right FAR of 10.0. The Properties are located outside of the Upper

West Side Historic District and are not subject to any landmark restrictions.

However, the proposed development is subject to Section 23-692 of the zoning code, which is known as

the “Sliver” law. Under this rule, the height of a building constructed on a lot of less than 45 feet cannot

exceed 100 feet. Furthermore, each fl oor height is restricted to 10 feet.

The proposed development was designed to avoid this height limitation by cantilevering approximately

fi ve feet above 276. A zoning counsel opinion from Kramer Levin Nastalis & Frankel LLP states that the

cantilevered tower would not be subject to the “Sliver” law height limitation.

Real Estate Taxes Street

Number

272

274

276

Total

Assessed

Value

$733,500

$576,000

$558,000

Transitional

Assessed Value

$314,684

$399,060

$292,032

Taxable

Value

$314,684

$399,060

$292,032

Tax

Rate

13.053%

13.053%

13.053%

Annual

Tax Bill

$41,076

$52,089

$38,119

$131,284

Asking Price Submit Offers

Peter Hauspurg



New York, NY 10011


West 86th Street

West 87th Street

West 85th Street

West 84th Street

Bro

ad

way

West

End

Avenue

Am

ste

rdam

Avenue


PAGE 07

Plot Plan


Survey

PAGE 08


PAGE 09

Loan Summary

Note Amount $25,053,750

Loan Purpose1 Refi nance and Acquisition

Note Date April 12, 2007

Maturity Date April 9, 2009

Rate L + 5.25% with fl oor of 9.75%. An additional 5.00% interest is accruing.

Amortization Interest Only

Borrowing Equity Street Smart Realty, LLC

Recourse $23,700,000 to the principals

Interest Reserve $800,000 (At Closing)

Other Holdbacks2 See Note

Comments 1 Refi nance 272 West 86th Street (“272”), acquire 274 West 86th Street (“274”) and 276 West 86th Street (“276”).2 Tenant Buyout Reserve: $700,000. Cost over runs in relation to the tenant buyout reserve were the sole responsibility of the principals.


PAGE 10

Zoning Opinion


PAGE 11


PAGE 12


PAGE 13


PAGE 14


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Overview

General Description The Properties consists of three adjacent 5-story walk-up apartment buildings. The eastern two buildings

(272-274 West 86th Street) were scheduled to be demolished and redeveloped with an 18-story, 18-unit

luxury condominium containing a net sellable residential area of 48,756 square feet. The above grade build-

ing area was to be approximately 54,000 square feet. The western most building (276) was to remain a

multi-family rental investment property.

272-274 West 86th Street - Proposed Development

Structural System Reinforced concrete and steel beams.

Facade and

Exterior

Exterior walls - masonry columns. The fenestration design incorporates over-sized double-height windows.

Overall, the design incorporates high levels of architectural detailing to conform to the architectural style of

the surrounding areas.

Elevators One elevator, keyed-access to each unit.

Stairwell Two scissor-type stairwells located along the eastern wall.

Apartments 18 full fl oor apartments containing 48,756 square feet of sellable area. The proposed unit mix is illustrated in

the following table.

Proposed Unit Mix

Floor

G-5

6-12

13-18

Total/Average

Source: Developer provided material

No.

5

7

6

18

Unit Area (Sq. Ft.)

2,550

2,982

2,522

2,709

Total Unit Area (Sq. Ft.)

12,750

20,874

15,132

48,756

Property Detail


PAGE 16

Apartments

continued...The initial tentative fl oor plans for apartments on fl oors 6 through 12 indicate units with 4 bedrooms and 4.5

bathrooms.

Heating,

Ventilation and Air

Conditioning (HVAC)

The HVAC system for the condominium building has not been provided. However, it is assumed that the

building would be heated either by basement level boilers or steam heat provided by a local utility company.

Amenities 24 / 7 doorman.

276 West 86th Street - Walk-Up Rental Property

Improvements

Summary

This portion of the subject property is improved with a 5-story, 10-unit walk-up apartment building con-

structed circa 1910. According to public record, the building contains an above grade area of 6,215 square

feet.

Structural System The foundation appears to consist of cast in place reinforced concrete foundations and brick bearing walls.

Façade and

Exterior

The exterior walls are of standard masonry construction with steel frame window openings and plaster work

on the windows lintels. The entrance is located along the south side of West 86th Street and is accessed

by 2 sets of double glass doors in the wooden frame.

Common Area The fi rst fl oor is comprised of the lobby which contains the mailboxes, the main staircase, and 2 apartments.

The lobby is fi nished with marble fl oors, and painted sheetrock, wood paneled, and exposed brick walls. Il-

lumination is provided by a circular ceiling-mounted light fi xture. The staircase consists of marble steps and

wood railing. A non-functioning fi replace is located in the main foyer of the 2nd fl oor.

Roof The main roof is set-aside as outdoor terrace space for the 2 top fl oor apartments.

Heating,

Ventilation and Air

Conditioning (HVAC)

The property is heated by a gas-fi red boiler manufactured by H. B. Smith Company. Heat is provided by

steam radiators located throughout the building. Air conditioning is via tenant-provided window units.


PAGE 17

Rent Rolls

274 West 86th Street Rent Roll

Unit Status(1) Tenant(2)

Basement Commercial The Sporn Company Inc.

Ground - Front Commercial The Sporn Company Inc.

Ground - Rear Commercial The Sporn Company Inc.

1A Stabilized L. Pine & K. Rubenstein

1B Market VACANT

2A Stabilized K. Kelly

2B Stabilized A. Kornblit

3A Stabilized VACANT

3B Market The Sporn Company Inc.

4A Stabilized VACANT

4B Stabilized VACANT

Total

(1) Sponsor did not fi le DHCR registrations for 2008(2) The commercial tenant has alleged it is not required to pay rent

due to Sponsor default on a buyout agreement. A supporting court

decision is under appeal, and is a matter that should be subject to

due diligence by any prospective purchaser.

272 & 276 West 86th Street - Status of Vacant Units

Unit 272(3) 276(3)

1A Market

1B Stabilized

2A Stabilized

2B Stabilized

3A Stabilized

3B Controlled

4A Market

4B Market

PHA Market

PHB Market

(3)Lender does not have access to DHCR rent-registrations for 272

and 276. The 276 designations, based on a 2007 rent roll, are un-

confi rmed. The two buildings contain a total of 20 residential units.


PAGE 18

Location Overview

Extending from Columbus Circle at 59th Street to Columbia University at 116th Street and nestled be-

tween Central Park and Riverside Park, the Upper West Side offers a residential haven containing many

of Manhattan’s most vibrant cultural resources and retail destinations.

Elegant, pre-war buildings along the avenues are intersected

by quiet residential side streets lined with brownstones and

elevatored apartment buildings. The neighborhood’s restored

townhouses, condominium and co-operative apartments are

coveted by young professionals, families, artists and celebri-

ties alike.

The Upper West Side is home to a quarter of a million people

and more than three thousand stores and restaurants. Neigh-

borhood residents and visitors stroll the neighborhood’s av-

enues to investigate the mix of unique boutiques, national re-

tailers, myriad restaurants and bars, and specialty food stores

including favorites such as Fairway, Zabar’s, and Citarella.

Local landmarks include world-renown institutions such as

Lincoln Center for the Performing Arts, The Julliard School of

Music, the American Museum of Natural History, the Cathedral

of St. John the Divine, Walter Reade Theater, and Columbia

University.

The Upper West side is situated between two of the natural

jewels of New York City, Central Park and Riverside Park.

Central Park, an 84-acre urban oasis, contains several lakes,

extensive walking trails, two ice-skating rinks, a wildlife sanctu-

ary, a zoo, grassy areas used for various sporting pursuits,

and playgrounds for children. The park is a popular stop for

migrating birds, and thus is popular with birdwatchers. The

6.2-mile road circling the park teems with joggers and bicy-

clists and hosts major races and public events. Riverside Park,

267-acres along the Hudson River, offers similarly rich recre-

ational opportunities and habitats for native species of plants

and animals.

Subway service for the No. 1 train in the Upper West Side

can be found along Broadway at West 59th, West 66th, West

72nd, West 79th, West 86th, West 96th, and West 103rd

Streets, with the Nos. 2 and 3 express trains stopping at West

72nd and West 96th Streets. Subway service for the B and C

trains in the Upper West Side can be found along Central Park

West at West 59th, West 72nd, West 81st, West 86th, West

96th, West 103rd, and West 110th Streets. MTA buses serve

the area along the major arteries and cross streets.


PAGE 19

This Offering Memorandum has been prepared exclusively by Eastern Consolidated (“Eastern Consolidated”)

on behalf of the Petra Mortgage Capital Corp. (“Lender”), regarding the purchase of the property described herein

at 272-276 West 86th Street, New York, NY (the “Property”). The materials and information contained in this Offer-

ing Memorandum do not purport to be all-inclusive or to contain all of the information which prospective investors

may need or desire. All materials have been developed by Eastern Consolidated, the Lender and other sources

and are subject to variation.

No representation is made by Eastern Consolidated or the Lender as to the accuracy or completeness of the infor-

mation contained herein and nothing contained herein is or shall be relied on as a promise or representation as to

the future performance of the property. Although the information contained herein is believed to be correct, Eastern

Consolidated and the Lender and their employees disclaim any responsibility for inaccuracies and

expect prospective purchasers to exercise independent due diligence in verifying all such information.

Further, Eastern Consolidated, the Lender and their employees disclaim any and all liability for representations

and warranties, expressed and implied, contained in or omitted from the Offering Memorandum or any other

written or oral communication transmitted or made available to the recipient. The Offering Memorandum does not

constitute a representation that there has been no change in the business or affairs of the Property or the Lender

since the date of preparation of the Offering Memorandum. Analysis and verifi cation of the information contained

in the Offering Memorandum is solely the responsibility of the prospective purchaser. Additional information and an

opportunity to inspect the Property will be made available upon request to interested and qualifi ed investors.

The Lender and Eastern Consolidated each expressly reserve the right, in their sole discretion, to reject any and

all expressions of interest or offers regarding the Property and/or terminate discussions with any entity at any time

with or without notice. The Lender shall have no legal commitment or obligation to any entity reviewing the Offering

Memorandum or making an offer to purchase the Property unless and until a written agreement for the purchase

of the properties has been fully executed, delivered and approved by the Lender and its legal counsel and any

conditions to the Lender’s obligations thereunder have been satisfi ed or waived. Eastern Consolidated is not

authorized to make any representations or agreements on behalf of the Lender.

This Offering Memorandum and its contents, except such information which is a matter of public record or is

provided in sources available to the public (such contents as so limited herein called the “Contents”) are of a

confi dential nature. By accepting the Offering Memorandum, you agree (i) to hold and treat it in the strictest

confi dence, (ii) not to photocopy or duplicate it, (iii) not to disclose the Offering Memorandum or any of its contents

to any other entity (except to outside advisors retained by you, if necessary, for your determination of whether

or not to make a proposal and from whom you have obtained an agreement of confi dentiality) without the prior

written authorization of the Lender or Eastern Consolidated, (iv) not to use the Offering Memorandum or any of

its contents in any fashion or manner detrimental to the interest of the Lender or Eastern Consolidated, and (v) to

return it to Eastern Consolidated immediately upon request of Eastern Consolidated or the Lender.

If you have no further interest in the Property, please return the Offering Memorandum forthwith.

No inspections of the Property are permitted unless accompanied by the Lender or a representative

from Eastern Consolidated.

Confi dentiality and Disclaimer



New York, NY 10017

Telephone 212.499.7700


[email protected]

Real estate investment services