Beacon Capital, Georgetown Co. pay $95M to SL Green for two office properties in Hell’s Kitchen

Beacon Capital Partners and Georgetown Company through the entity BCAL 707 Property LLC paid $95 million to SL Green Realty through the entity 707 11 Owner LLC for the corner office building at 707 11th Avenue in Hell’s Kitchen, Manhattan and the midblock office building at 615 West 50th Street in Hell’s Kitchen, Manhattan.
The deal closed on February 22, 2022 and was recorded on March 15, 2022. The two properties have 122,205 square feet of built space and 31,833 square feet of additional air rights for a total buildable of 138,075 square feet according to PincusCo analysis of city data. The sale price per built square foot is $777 and the price per buildable square foot is $688 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 SL Green Realty was Andrew S. Levine. The signatory for Beacon Capital Partners and Georgetown Company was Kirsten L. Hoffman. Crain’s New York first reported the sale in December. 

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 707 11th Avenue.

Prior sales and revenue

Prior to this transaction, Pincusco has no record that the buyer Beacon Capital Partners had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller SL Green Realty purchased five properties in five transactions for a total of $366.9 million and sold 15 properties in 13 transactions for a total of $1.5 billion over the same time period. The two properties with a total of 122,205 square feet of built space generated revenue of $5.5 million per year or $45 per square foot. The sale price per square foot was $777.

The property

The 707 11th Avenue parcel has frontage of 100 feet and is 175 feet deep with a total lot size of 17,573 square feet. The zoning is M2-4 which allows for up to 5 times floor area ratio (FAR) for manufacturing. The city-designated market value for the property in 2022 is $20.2 million. The most recent loan totaled $53.5 million and was provided by Wells Fargo on January 10, 2020. The property has a city-determined energy rating of 52 out of 100.

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 $4,000 in OATH penalties in the last year.

Development

For the tax lot buildings, one out of the two buildings received an initial certificate of occupancy in the last ten years. 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 Hell’s Kitchen, the bulk, or 39 percent of the 45 million square feet of built space are residential elevator buildings, with specialty buildings next occupying 17 percent of the space. In sales, Hell’s Kitchen has 3.5 times the average sales volume among other neighborhoods with $972.1 million in sales volume in the last two years and is the 13th highest in Manhattan. For development, Hell’s Kitchen has 1.3 times the average amount of major developments relative to other neighborhoods and is the 18th highest in Manhattan. It had 1.2 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.

The block

On the tax block of 707 11th Avenue, PincusCo has identified the owners of four of the 10 commercial properties representing 265,654 square feet of the 421,604 square feet. The largest owner is SL Green Realty, followed by LSC Development and then Park-It Management. There is one active new building construction project totaling 123,181 square feet. It is a 123,181-square-foot storage (S-1) building developed by Christopher Barry with plans filed April 25, 2018 and permitted February 22, 2019.

The majority, or 34 percent of the 421,604 square feet of built space are industrial buildings, with mixed-use buildings next occupying 32 percent of the space.

The seller

The PincusCo database currently tracks 37 commercial properties with 14,569,626 square feet and a city-determined market value of $6.1 billion for SL Green, but the database is incomplete and SL Green owns more. (Market value is typically about 50% of actual value.) The portfolio has $2.5 billion in debt, with top three lenders as Wells Fargo, Goldman Sachs, and Credit Agricole respectively. Within the portfolio, the bulk, or 87 percent of the 14,569,626 square feet of built space are office properties, with residential elevator properties next occupying 7 percent of the space. They are all located in Manhattan.

Surrounding

Within a 400-foot radius of 707 11th Avenue, PincusCo identified five commercial real estate items of interests occurred over the past 24 months.
Of those five items, five were loans above $5 million totaling $175.7 million. The most recent of the five was LSC Development which borrowed $37.8 million from Ares Commercial Real Estate secured by the 143,449-square-foot industrial (E7) on 622 West 51st Street on December 17, 2021.

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