Sprawling MOB Portfolio Changes Hands

The St. Luke’s Pavilion portfolio in Morningside Heights.

NEW YORK CITY—Delshah Capital has acquired the St. Luke’s Pavilion portfolio in Morningside Heights from Mount Sinai St. Luke’s for nearly $112 million. The portfolio, which consists of five buildings totaling 205,000 square feet, traded at approximately $543-per-square-foot. The properties will be repurposed to become residential. They cover almost a half city block along Morningside Drive between West 113th & West 114th streets. The portfolio includes 401 W. and 411 W. 113th St., along with 400 and 408 W. 114th St. Cushman & Wakefield’s Paul Massey, Hall Oster, Teddy Galligan and Andrew Berry exclusively handled the transaction on behalf of Mount Sinai. The transaction is one of the largest done by the group that had been Massey Knakal Realty Services before that firm’s acquisition by Cushman at the end of 2014. Eastern Consolidated’s Adam Hakim and Sam Zabala, managing directors in the capital advisory division, arranged a $60-million first mortgage bridge loan to finance the acquisition. James Murad, director, financial services, served as the analyst on the deal. The Bank of the Ozarks provided the $60-million loan for Delshah Capital, which also received a separate $17.5-million mezzanine loan from Square Mile Capital. The property portfolio includes five of the original 10 buildings constructed for the St. Luke’s Hospital’s Morningside Heights campus in the early 1900s and a two-story interior carriage house once home to horse-drawn ambulances. In their present state, the buildings stand between six and nine stories tall featuring large floor plates, high ceilings, full basements and windows throughout. The buildings formerly housed numerous hospital services operations that are now being relocated to alternate space within the remainder of the campus. “The proceeds of the sale of the Pavilion buildings enable the hospital to continue to reinvest in its core facilities and the neighborhood will benefit from enhanced healthcare service,” says Massey. “The purchaser will have the opportunity to repurpose a substantial and distinct portfolio in one of New York City’s most supply constrained markets.” Adds Oster, “It’s very rare to have such a large parcel come to market in the neighborhood and it will be very exciting to see how the transition to residential contributes to the vibrancy of the area.” In January, Delshah Capital closed on more than $102 million of corporate bonds (traded on the Tel-Aviv Stock Exchange). The offering was oversubscribed by more than 50% and included some of Israel’s most prominent institutional investors such as Harel Insurance, Migdalia Insurance, Meitav Pension, IBI mutual funds, Union Bank, Excellence and Menora mutual funds as well a number of major hedge funds. The offering was supported by Delshah’s existing New York City portfolio, which at the time of the offering had a gross asset value of more than $500 million.