Office Building Forecloses at Penn Station for 25 Percent of Its Development Price

Churchill Real Estate’s $90 million investment at 263 West 34th Street had collapsed to a $16.5 million winning bid by a creditor–which had once refinanced the building–at a September 20 foreclosure auction. Current tenants include a radiology company and a next-gen headset developer.

| 27 Sep 2023 | 03:05

The office market in Manhattan remains battered, with the latest evidence being the foreclosure of a W. 34th St. office building developed by Churchill Real Estate. They had originally spent $90 million developing the property.

According to The Real Deal, which originally reported on the forced September 20 sale, the structure sold for only $16.5 million in an auction won by Marathon Asset Management.

Marathon Asset Management, which is a 25 year-old global investment fund based in New York City, was one of Churchill’s creditors. The sale comes several years after Marathon said that Churchill defaulted on $50 million in loans. They had previously loaned the company $52 million to refinance the debt on the building prior to its completion, but the pandemic sharply derailed matters; pharmaceutical giant Merck pulled out of a six-floor lease shortly after public health measures began.

New York County Supreme Court documents revealed that the building owed Marathon $65 million in outstanding liens by May 19 of this year, namely in the form of default interest.

Crain’s New York Business thumbed through real estate records on the building–made available by the research firm Costar–and determined that the building is currently 81 percent leased. Notable tenants include Kolb Radiology and the next-gen headset firm Poly.

The foreclosure is only one more combustion in a long sequence of them, as Manhattan’s commercial real estate market faces a rather catastrophic year.