Namdar, Empire Swallow $22M Loss At 345 Seventh Ave.
Namdar Realty Group and Empire Capital have offloaded 345 Seventh Ave. for a nearly 21% haircut, less than a year after facing foreclosure at the office building.
The Katan Group, in partnership with Kohan Retail Investment Group and investor Ilya Mikhailov, paid $85M for the Midtown property, Isaac Katan said in an email.
The century-old building — and the properties at 341 and 343 Seventh Ave. and 167 W. 29th St., which were also acquired as part of the deal — span 75% of the entire block between West 29th and West 30th streets, Katan said.
“This is the right time to invest in New York City,” Katan said in a statement. “The current proposed zoning changes to the neighborhood, aimed at bringing thousands of residential units to the area surrounding the magnificently transformed Penn Station, present an especially promising opportunity to create something impactful for the community.”
When reached by phone, Katan told Bisnow a conversion is being considered, but a decision hasn't been made.
In 2021, Namdar, which has historically been known for its ownership of malls, and Empire Capital went on a buying spree, betting on the return of office. The investors bought 345 Seventh Ave., along with the three smaller properties, for $107M.
At the time, long-term tenants occupied 43% of the four buildings’ combined 212K rentable SF, according to a Real Deal analysis of the building’s rent roll.
But in July, Benefit Street Partners, which provided a $78M mortgage to Namdar and Empire, filed foreclosure proceedings on the property. An auction was scheduled for September, TRD reported at the time.
Katan said that he didn't purchase the property through an auction. Namdar, Empire and Kohan didn't immediately respond to Bisnow’s requests for comment. A Benefit Street spokesperson declined to comment.
The sale is an example of how far values have fallen for office buildings that are considered below Class-A quality.
“Properties are now changing hands for a third of the cost per square foot compared to three years ago when Namdar Realty Group purchased 345 Seventh Avenue,” Namdar Chief Operating Officer Dan Dilmanian told Commercial Observer in a July statement. “Many owners, Namdar included, are investing heavily in building improvements across their portfolios while appraisal valuations move in the other direction.”
Namdar and Empire bought other properties that were seen as distressed, acquiring 830 Third Ave. in 2022 and 321 W. 44th St. last year, the latter for a roughly 67% discount to the previous sale price.
But many older office buildings could be converted because of changes under City of Yes, which passed at the end of last year. The 25-story tower at 345 Seventh is also in the area of Midtown South that the Adams administration is looking to rezone to allow commercial buildings to be turned into residential uses.
