$18.5M bankruptcy filed for residential loft building in Dumbo

Real estate investor and boutique hotel developer Joseph Torres Jr. placed the residential loft building 25 Jay Street, located in Dumbo, Brooklyn, in bankruptcy protection nine months after a trustee for the lender filed an $18.5 million pre-foreclosure action. Joseph Torres Jr. filed the bankruptcy petition in the Eastern District of New York in Brooklyn on November 7, 2023. 1-23-44083-ess

Petition LINK

The PincusCo database currently indicates that Joseph Torres Jr. owns at least six commercial properties with more than 250,000 square feet and 168 residential units. The portfolio has at least $56.9 million in debt, with the top three lenders as Ellington Management Group, Citibank, and Edgewood Capital Advisors respectively. Within the portfolio, the bulk are hotel properties, with walkup properties next occupying 33 percent of the space. They are all located in Brooklyn. The other buildings include the Franklin Guesthouse at 214 Franklin Street, the Box House Hotel at 77 Box Street, 233 Norman Avenue and 99 Sutton Street.

On February 14, 2023, Wells Fargo as trustee for the bondholders of the securitized loans in Series 2020-B17, filed the pre-foreclosure action.

According to the pre-foreclosure complaint, “Beginning no later than the Monthly Payment Date for June 2021, and as early as the monthly Payment Date for April 2020, Borrower failed on multiple occasions to pay the Monthly Debt Service Payment Amounts or to make the required deposits into the Accounts when due under the Loan Documents. Although Borrower subsequently and belatedly made payments to Lender in the amount of its missed payments, Borrower has never paid the late charges or interest at the Default Rate resulting from the Payment Default…Borrower has failed to comply in full with its cash management obligations, including but not limited to failing and/or refusing to deposit the payments received in the Specified Tenant Bankruptcy (Brooklyn Roasting Works filed Chapter 11 October 21, 2020)…Lender, through its counsel, provided a Notice of Continuing Default, Acceleration and Reservation of Rights to Borrower on December 28, 2022.” At the time of the filing, the complaint alleged a total of $21,300,419 was due.

In 2013, Joseph Torres Jr. sought to sell 25 Jay Street for $34 million.

The property

The elevator building with 26 residential units in Dumbo has 47,735 square feet of built space and 47,720 square feet of additional air rights for a total buildable of 95,440 square feet according to a PincusCo analysis of city data. The parcel has frontage of 90 feet and is 150 feet deep with a total lot size of 9,544 square feet. The lot is irregular. The zoning is M1-6/R8X which allows for up to 10 times floor area ratio (FAR) for manufacturing and up to 6.02 times FAR for residential with inclusionary housing. The property is in the DUMBO Historic District. The city-designated market value for the property in 2022 is $13.6 million. The most recent loan totaled $18.5 million and was provided by Citibank on January 29, 2020.

The owners according to the Department of Housing Preservation and Development includes Joe Torres, head officer and Eric Perez, agent. The business entities are Jes Property Management Services, Inc and 25 Jay Street Llc.

Prior sales and revenue

The 47,735-square-foot property generated revenue of $2.2 million or $46 per square foot, according to the most recent income and expense figures.

Development

Over the past five years, there has been no NYC Department of Buildings new building, demolition, or alteration permit application valued at more than $20,000 filed for this parcel.

Violations and lawsuits

According to city public data, the property has received $1,000 in OATH penalties in the last year.

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $18.5 million commercial foreclosure concerning a loan filed on February 14, 2023, by Series 2020-B17 against Joseph Torres.

The neighborhood

In DUMBO, The majority, or 56 percent of the 4.3 million square feet of commercial built space are office buildings, with elevator buildings next occupying 36 percent of the space. In sales, DUMBO has near average sales volume among other neighborhoods with $11.3 million in sales volume in the last two years and is the 45th highest in Brooklyn. For development, DUMBO has near average amount of major developments among other neighborhoods and is the 42nd highest in Brooklyn. It had 37,593 square feet of commercial and multi-family construction under development in the last two years, which represents 0.87 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the five commercial properties representing 81,310 square feet of the 202,654 square feet. The largest owner is Edward J Minskoff Equities, followed by Joseph Torres and then Pearl Realty Management. On the tax block, there was one new building construction project filed totaling 184,467 square feet. It is a 184,467 square-foot business (B) building submitted by Edward J. Minskoff Equities and filed by Daniel Centonze with plans filed August 27, 2020 and permitted October 4, 2021.

The surrounding

Within a 400-foot radius of 25 Jay Street, PincusCo identified one commercial real estate item of interests occurred over the past 24 months. It was a loan which Two Trees Management borrowed $108.4 million from M&T Bank secured by the 500,000-square-foot, 240-unit office building (O6) on 20 Jay Street on November 6, 2023.

Direct link to the property’s ACRIS page and link to DOB NOW portal.