Chetrit Group pays $78M to CIM Group, L+M for dev site in Lower East Side

Chetrit Group through the entity 265 Cherry Street Owner LLC paid $78 million to CIM Group and L+M Development Partners through the entity Two Bridges Associates Limited Partnership for the development site at 265 Cherry Street in Lower East Side, Manhattan.
The deal closed on March 31, 2022 and was recorded on April 12, 2022.The property has zero square feet of built space and 313,410 square feet of additional air rights for a total buildable of 313,410 square feet according to PincusCo analysis of city data. The sale price per buildable square foot is $248 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 this property and an adjacent parcel on November 27, 2013, for $279.3 million. CIM sold the other parcel in December 2020 to Related Companies for $423.96 million. The signatory for CIM Group and L+M Development Partners was David Thompson. The signatory for Chetrit Group was Jacob Chetrit. Commercial Observer first reported the sale. They report Galaxy Capital’s Henry Bodek arranged the financing. 
Chetrit Group through the entity 265 Cherry Street Owner LLC as borrower signed an acquisition loan with lender Madison Realty Capital through the entity 265 South Street 1 LLC valued at $63 million of senior debt with a total of $70 million in debt.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Chetrit Group purchased one property in one transaction for a total of $14.9 million and sold three properties in two transactions for a total of $68.2 million over the past 24 months.
The seller CIM Group purchased one transaction for a total of $231.3 million and sold one property in one transaction for a total of $220 million over the same time period.

The property

The 275 Cherry Street parcel has frontage of 285 feet and is 107 feet deep with a total lot size of 31,341 square feet. The lot is irregular. The zoning is C6-4 which allows for up to 10 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 $13.9 million.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has not received any significant violations in the last year.

Development

On these lots, there is one active new building construction project for a 1,803-unit, 1,274,276-square-foot R-2 building. The project was filed by David Thompson of CIM with plans filed September 7, 2021 and it has not been permitted yet.

The neighborhood

In Lower East Side, the majority, or 60 percent of the 33.2 million square feet of commercial built space are residential elevator buildings, with residential walkup buildings next occupying 15 percent of the space. In sales, Lower East Side has 2.5 times the average sales volume among other neighborhoods with $677.8 million in sales volume in the last two years and is the 18th highest in Manhattan. For development, Lower East Side has 2.4 times the average amount of major developments relative to other neighborhoods and is the 9th highest in Manhattan. It had 2.2 million square feet of commercial and multi-family construction under development in the last two years, which represents 7 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of one of the two commercial properties representing 657,592 square feet of the 657,592 square feet. The identified owner is L+M Development Partners. There is one active new building construction project totaling 1,274,276 square feet. It is a 1,803-unit, 1,274,276-square-foot R-2 building filed by David Thompson with plans filed September 7, 2021 and it has not been permitted yet.

The majority, or 100 percent of the 657,592 square feet of built space are residential elevator buildings, with industrial buildings next occupying 0 percent of the space.

The seller

The PincusCo database currently indicates that L+M Development Partners owned at least 136 commercial properties with 16,416,910 square feet and a city-determined market value of $1.8 billion. (Market value is typically about 50% of actual value.) The portfolio has $2.8 billion in debt, with top three lenders as NYC Housing Development Corporation, Wells Fargo, and NYS Housing Finance Agency respectively. Within the portfolio, the bulk, or 87 percent of the 16,416,910 square feet of built space are residential elevator properties, with residential walkup properties next occupying 10 percent of the space. The bulk, or 44 percent of the built space, is in Brooklyn, with Manhattan next at 37 percent of the space.
The PincusCo database currently indicates that CIM Group owned at least 13 commercial properties with 2,537,300 square feet and a city-determined market value of $477.9 million. (Market value is typically about 50% of actual value.) The portfolio has $1.4 billion in debt, with top three lenders as JPMorgan Chase, Mack Real Estate Group, and Claros Mortgage Trust respectively. Within the portfolio, the bulk, or 55 percent of the 2,537,300 square feet of built space are office properties, with residential elevator properties next occupying 45 percent of the space. The bulk, or 71 percent of the built space, is in Brooklyn, with Manhattan next at 29 percent of the space.

The buyer

The PincusCo database currently indicates that Chetrit Group owned at least 21 commercial properties with 2,406,967 square feet and a city-determined market value of $453 million. (Market value is typically about 50% of actual value.) The portfolio has $1.5 billion in debt, with top three lenders as Bank of Montreal, Starwood Mortgage Capital, and Starwood Capital Group respectively. Within the portfolio, the bulk, or 39 percent of the 2,406,967 square feet of built space are office properties, with industrial properties next occupying 24 percent of the space. The bulk, or 49 percent of the built space, is in Queens, with Manhattan next at 42 percent of the space.

Surrounding

Within a 400-foot radius of 275 Cherry Street, Pincusco identified three commercial real estate items of interests occurred over the past 24 months.
Of those three items, two were sales above $5 million totaling $587 million. The most recent of the two was SSPF REIT 1 LLC which bought the 262,875-square-foot, 258-unit rental (D6) on 275 South Street for $163 million from SSPF REIT, Inc. on January 21, 2021.
One of those three items was a loan which Nelson Management Group borrowed $105 million from Helaba secured by the 262,875-square-foot, 258-unit rental (D6) on 275 South Street on December 28, 2021.

UPDATED: Updated April 22, 2022 with mention of CIM’s $423.96 million sale to Related.

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