Mountbatten Equities has sold 10 units at its Gramercy Park condominium, Rutherford Place, to an entity that identifies itself as its mezzanine lender.
The buyer, a limited liability company called 305 Second Avenue Mezz Lender, bought the units for $18.64 million in early March, property records show. Alexander Zabik, the managing director and credit portfolio manager of private equity firm Pennybacker Capital, signed the deed for the LLC.
The deal works out to roughly $1.86 million per unit. Mountbatten is marketing the remaining apartments with Compass for between $825,000 to $3.195 million. It’s unclear how many units the developer still owns.
There’s been increasing interest in bulk condo buys among institutional investors, but completed transactions have been few and far between as many developers balk at the deep discounts would-be buyers are seeking.
The largest bulk deal to date is Elad Group’s $90 million sale of 70 units at its Hell’s Kitchen condo to Tishman Realty. Those units traded at a 40.5 percent discount compared to ones that are already in contract. Other deals have been done for less, such as GID Development’s $27 million sale of eight units at Waterline Square to a South American family. The developer reportedly gave the buyer a 7 percent discount.
Bulk sales, and even wholesale offerings shopped around by brokers, are typically kept quiet due to the widespread interpretation of such deals as symptomatic of deeper challenges for the developer and the project. Wholesale deals can also represent settlements among developers and investors, as was the case when the nation of Senegal shelled out $25 million to the developer of its Midtown tower last year, or in the case of Magnum Real Estate’s $33 million sale of 10 units to one its investors in 2019.
Neither Mountbatten nor Pennybacker responded to requests for comment, so the circumstances of this deal are unclear.
But Rutherford Place is not your average condo with lingering unsold units. The building is steeped in New York and celebrity history, and its sales effort has been ongoing for decades.
The 10-story building at 305 Second Avenue was built in 1902 by banker J.P. Morgan to be the city’s largest maternity hospital. It eventually became a general hospital and then, in the 1960s, a drug treatment center.
Mountbatten’s owners, Winthrop Chamberlin and Barnet Liberman, bought the building from Beth Israel Medical Center in the 1980s for $5.5 million and converted it into residential condos. But notably, the developers, who were also behind the Printing House condo conversion in West Village, didn’t make a concerted effort to sell any of its approximately 127 units for more than two decades.
Instead, the developers rented out most of the units to claim a variety of tax benefits, according to building records and an interview Liberman did with the New York Times. Over the years, the building became known for its star-studded rent roll, with former tenants that include comedian Dave Chappelle, producer Benny Medina, rapper and producers Sean “Diddy” Combs, and actors Penn Badgley, Wesley Snipes, Judd Nelson, Chris Farley, and Tom Cruise and his then-wife Mimi Rogers, per New York Magazine.