The Real Deal New York

Sovereign Partners pays $22 million for Chelsea parking lot

Developer Ben Shaoul planned to build mixed-use project at West 28th Street site

February 16, 2012 03:00PM
By Adam Pincus

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140 West 28th Street (credit: PropertyShark)

The Midtown-based development firm Sovereign Partners led by Darius and Cyrus Sakhai paid $21.5 million for a Chelsea parking lot at 140 West 28th Street where developer Benjamin Shaoul struggled and ultimately failed to raise a mixed-use building.

Sovereign signed a contract with property owner 140 West 28th Street Associates in November 2011, and closed on the purchase Feb. 2, city property records published today show.

Shaoul, president of Magnum Real Estate Group, in September signed over the deed of the adjacent seven-story mixed-use building 146 West 28th Street to Sovereign, after Sovereign bought the defaulted note from lender Brooklyn Federal Savings in May 2011 for $13.5 million.

Sovereign declined to comment, and Shaoul did not immediately respond to a request for comment.

The adjacent properties, between Sixth and Seventh avenues, are located on a block once bustling with flower wholesale and retailers, where three hotels have sprouted in recent years, including the Hilton Garden Inn New York/Chelsea at 121 West 28th Street.

Barbara Dankser, an associate at investment sales firm Marcus & Millichap, and Shlomo Manne, a senior associate there, represented both the seller and the buyer of the parking lot, the company said.

“This is a unique development parcel in a gentrifying submarket,” Dansker said in a statement.

Shaoul sought to build a hotel or another large mixed-use project spanning both sites, which together and with purchased air rights have about 169,828 square feet of development potential with a manufacturing zoning that permits a hotel use, property marketing materials say. That equates to a price per foot of about $200.

But Shaoul defaulted on the Brooklyn Federal loan, and the bank sold the loan to Sovereign. Shaoul filed a $15 million lawsuit in September against the Sakhais and Brooklyn Federal. The suit claimed Shaoul had a deal with Earvin “Magic” Johnson’s real estate investment venture Canyon-Johnson Urban Funds to buy back the loan for $13 million, but the bank instead went to the Sakhais. That case was discontinued later that month.

In December, the Sakhais put both the building and the parking lot (which they controlled because they had the parcel in contract) on the market through Massey Knakal Realty Services, but have pulled the listing, according to the brokerage.

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