Igal Namdar and Empire Capital are making a contrarian bet on Manhattan office properties.
But one of their assets is challenging that investment thesis. Benefit Street Partners recently initiated a Uniform Commercial Code foreclosure on the joint venture’s office properties at 345 7th Avenue.
Walker & Dunlop’s Aaron Appel, Jordan Casella and Sean Reimer are spearheading the marketing of the foreclosure sale. The auction is set to be held on September 12.
Namdar and Josh Rahmani and Ebi Khalili’s Empire Capital acquired the century-old office property in Midtown and three smaller buildings for $107 million in 2021. Benefit Street provided a $78 million mortgage.
The deal was part of a string of acquisitions made by Namdar and Empire Capital, usually joined by other investors from Great Neck, New York, to buy office properties in Manhattan. Some of these properties included 529 Fifth Avenue and 830 Third Avenue.
The group bet they could acquire the assets at a low enough basis to offset any vacancies. Many in New York real estate have made their fortune by buying assets during times of distress.
“The prices of these office buildings have dropped so much that it’s hard to not make money at these levels,” Igal Namdar told Bloomberg TV in late June.
Yet some in the industry wondered whether the group was catching a falling knife.
The gamble on 345 7th Avenue was particularly bold. The buildings were only 59 occupied at the time and most of the leases expired in 2026, according to data from Morningstar. Namdar previously told the Commercial Observer that the city’s changes in zoning laws prevented it from converting the property to residential.
“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,” Igal Namdar said in a statement to The Real Deal.
He added, “We are working collaboratively with the lender through this process and are actively developing a resolution that works for both parties.”
Namdar said his group is still interested in Manhattan and they are committed to building its portfolio in the borough.
If Namdar or Empire cannot work out a deal with Benefit Street, they can put the property into bankruptcy which automatically halts any non-judicial foreclosure.
The Namdar Realty Group is best known for its Class B and C malls in smaller cities throughout the United States. The company owns a few hundred shopping centers across the country.
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