DelShah Buys $11M Debt on Manhattan Condo Building
- May 24, 2012
New York—DelShah Capital has bought the $11 million first mortgage on 11 East 36th Street (Morgan Lofts) in Manhattan from First Central Savings Bank (FCSB). The collateral for the note consists of 14 residential units (about 11,460 square feet); two ground floor retail spaces (6,480 square feet); and a second-floor office suite (5,320 square feet).
Morgan Lofts includes a total of 67 residential condos—studios and one- and two- bedrooms ranging in size from 500 to 1,100 square feet—and is fully occupied. The property is also home to the popular beer bar, The Gingerman.
The note is in default and was accelerated in December 2011. According to DelShah, the FCSB note holds strategic value when combined with an existing $2.2 million loan, which the company purchased from China Trust in 2009 for five residential units in the same building. DelShah is now the largest debt holder in the building.
Morgan Lofts is in a fast-growing submarket of Manhattan (Murray Hill), but was bruised by financial crisis, explains DelShah CEO Michal Shah. The goal now is to strengthen the financial and operating capacity of the asset, he adds.
Separately, DelShah reports that it has received payment for the senior lien on 118-120 South Second Street in Williamsburg, Brooklyn. Last year, the company purchased a nonperforming note on the property for $5.1 million. Since then, DelShah has worked through creditor litigation and a complicated bankruptcy to reach a payoff of $7.1 million with the owner. “The more complicated and layered the financial and legal situation a piece of real estate is in, the more we enjoy negotiating the deal,” Shah tells MHN.
DelShah obtained full management control of the asset last summer and completed deferred maintenance and upgrades. The multifamily building contains 17 residential condo units totaling 17,080 square feet, and was acquired by Kai Management. The building is fully occupied.