Namdar and Empire’s 345 Seventh Avenue Headed to UCC Auction
By Abigail Nehring July 19, 2024 3:11 pm
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After shopping mall mogul Igal Namdar started talks to hand back the keys to 345 Seventh Avenue to its lender, the office building will head to the auction block on Sept. 12.
Collateral manager Benefit Street Partners (BSP) initiated a Uniform Commercial Code (UCC) sale of the Namdar Realty Group and Empire Capital’s 345 Seventh, along with three neighboring small buildings, according to a draft public notice of the foreclosure sale by Walker & Dunlop’s Jordan Casella and Christopher de Raet.
“The current leasing market has been challenging for many commercial buildings in New York, and unfortunately, 345 Seventh Avenue has not been immune to these challenges,” Namdar said in a statement. “We are working collaboratively with the lender through this process and are actively developing a resolution that works for both parties.”
The Walker & Dunlop brokers and a spokesperson for BSP declined to comment. The UCC auction announcement was first reported by The Real Deal.
Suburban mall magnate Namdar teamed up with Empire to buy the portfolio near Pennsylvania Station for $107 million in 2021. Aside from the 25-story office tower at 345 Seventh, the portfolio includes neighboring three- and four-story office buildings at 341 Seventh Avenue, 343 Seventh Avenue and 167 West 29th Street.
The joint venture secured a $78 million collateralized loan obligation mortgage from BSP for the properties later the same year, planning to renovate the largest of them and increase its occupancy rate.
Namdar spoke on television with bravado about his plans to use a similar strategy to turn around failing malls for distressed offices, but behind the scenes things had gone awry. Occupancy dropped at 345 Seventh and Morningstar DBRS predicted last fall the joint venture would be too deep in debt to qualify for an extension by the time the loan matures in September.
“The thought back then was that work-from-home might die off,” Roush said. “You’re not going to have this lower tenant demand sticking around forever. And what we’ve seen in the few years since that is actually those trends are sticking around, and they are permeating the choices that tenants are making.”
Yet, Namdar and Empire’s bet on the office market isn’t fully over. Its three-year buying spree that started with 345 Seventh also includes 830 Third Avenue, 529 Fifth Avenue and 321 West 44th Street. And the firms haven’t lost interest in the market with them planning to keep building their portfolio in the region, Namdar said in a statement.
The deepening distress at 345 Seventh has not escaped the notice of 32BJ Service Employees International Union, whose members work at the property as commercial building cleaners. The union has been fighting a plan by the joint venture to use nonunion labor.
“Responsible commercial building owners in New York City, who represent the overwhelming majority of commercial office buildings in the city, understand that having well-trained, dedicated and stable building service workers is good for business,” Denis Johnston, executive vice president of 32BJ, said in a statement. “Unfortunately, it seems Namdar doesn’t get that.”
Abigail Nehring can be reached at anehring@commercialobserver.com.
