Delshah Capital buys 3 UWS loans with $36.9M in original principal, owner is Quality Capital

Delshah Capital bought three notes that had an original principal of $36.9 million in three separate transactions from Signature Bank secured by Quality Capital’s residential portfolio on the Upper West Side. The buildings are owned by Shimshon Klugman’s Quality Capital. The portfolio contains a total of 147 units.

PincusCo calculates that Delshah has at least 48 buildings in Brooklyn and Manhattan with a concentration in walkups, composing more than 709,000 square feet and 659 units. These figures have not been verified by Delshah Capital.

According sources, the debt was purchased for approximately $33.5 million.

In the first transaction, Delshah Capital through the entity DS Manhattan Valley Noteholder LLC bought a note with an original principal of $14.8 million from Signature Bank secured by Quality Capital’s midblock 24-unit residential elevator building at 7 West 108th Street in Upper West Side, Manhattan and midblock 24-unit residential elevator building at 3 West 108th Street in Upper West Side, Manhattan.
The two properties have 45,168 square feet of built space according to PincusCo analysis of city data.

In the second transaction, Delshah Capital through the entity DS Manhattan Valley Noteholder LLC bought a note with an original principal of $14.6 million from Signature Bank secured by Quality Capital’s 44-unit residential elevator building at 10 Manhattan Avenue in Upper West Side, Manhattan.

The property has 44,160 square feet of built space and 13,517 square feet of additional air rights for a total buildable of 57,713 square feet according to PincusCo analysis of city data. The owner bought the property on October 16, 2018, for $22 million.

In the third, Delshah Capital through the entity DS Manhattan Valley Noteholder LLC bought a note with an original principal of $7.5 million from Signature Bank secured by Quality Capital’s midblock 36-unit residential walkup building at 4 Manhattan Avenue in Upper West Side, Manhattan and midblock 19-unit residential walkup building at 8 Manhattan Avenue in Upper West Side, Manhattan.
The two properties have 28,536 square feet of built space and 14,200 square feet of additional air rights for a total buildable of 42,742 square feet according to PincusCo analysis of city data. The loan price per built square foot is $zero and the price per buildable square foot is $zero 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 deal closed on February 24, 2022 and was recorded on March 23, 2022.

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 7 West 108th Street.

Prior sales and revenue

The owner according to the Department of Housing Preservation and Development is Yonah Halton, head officer. The business entity is Quality Bh 108th Manhattan Llc. The two properties with a total of 45,168 square feet of built space generated revenue of $1.5 million per year or $34 per square foot.

The property

The 7 West 108th Street parcel has frontage of 50 feet and is 100 feet deep with a total lot size of 5,046 square feet. The zoning is R7-2 which allows for up to 3.44 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $3.9 million.

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 three DOB violations, $293,840 in ECB penalties, 39 housing violations, and $303,170 in OATH penalties in the last year. The building 3 West 108th Street has multiple Environmental Control Board violations including illegal occupancy charges, totaling more than $200,000 in the past 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 Upper West Side, the majority, or 68 percent of the 95.5 million square feet of commercial built space are residential elevator buildings, with residential walkup buildings next occupying 13 percent of the space. In sales, Upper West Side has the 8th highest sale turnover among other neighborhoods in the city with $1.5 billion in sales volume in the last two years. For development, Upper West Side has 1.9 times the average amount of major developments relative to other neighborhoods and is the 11th highest in Manhattan. It had 1.8 million square feet of commercial and multi-family construction under development in the last two years, which represents 2 percent of the neighborhood’s built space.

The block

On the tax block of 7 West 108th Street, PincusCo has identified the owners of four of the 12 commercial properties representing 163,729 square feet of the 364,127 square feet. The largest owner is L+M Development Partners, followed by Acuity Capital Partners and then Libby Jackson-Diagne. There are no active new building construction projects on this tax block.

The majority, or 61 percent of the 503,521 square feet of built space are residential walkup buildings, with residential elevator buildings next occupying 29 percent of the space.

Surrounding

Within a 400-foot radius of 7 West 108th Street, Pincusco identified seven commercial real estate items of interests occurred over the past 24 months.
Of those seven items, one was for major renovation including a certificate of occupancy change. It was a permit issued on August 16, 2021 for the $448,402 renovation of 22,035-square-foot R-2 building with 30 residential units at 474-475 Central Park West.
Of those seven items, two were sales above $5 million totaling $91.7 million. The most recent of the two was Black Spruce Management which bought the 16,308-square-foot, 24-unit rental (D1) on 165 Manhattan Avenue and one other property for $21 million from Orbach Group on November 4, 2021.
Of those seven items, four were loans above $5 million totaling $113.5 million. The most recent of the four was Black Spruce Management which borrowed $20.3 million from Signature Bank secured by the 16,308-square-foot, 24-unit rental (D1) on 165 Manhattan Avenue and one other property on November 4, 2021.

Direct link to Acris document. link

Direct link to Acris document. link