$18.5M pre-foreclosure on Dumbo mixed-use property

The servicer for a CMBS loan with an original principal of $18.5 million secured by the 26-unit mixed-use property at 25 Jay Street in Dumbo, Brooklyn, alleges the loan is in default and is seeking to foreclose on the asset. The property owner, Joseph Torres, sought to sell the building in 2013 for $34.5 million, according to an article in Brownstoner.

The servicer filed the pre-foreclosure case in the Eastern District of New York, 1:23-cv-01211-ENV-PK. Joseph Torres has not yet filed response papers.

The elevator building with 26 residential units 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.

Joseph Torres obtained the $18.5 million loan from Citibank in January 2020, and the loan was later securitized through the Benchmark 2020-B17 Mortgage Trust.

Court filings represent the position of one party and are not necessarily accurate or complete.

According to the 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.” The complaint alleges a total of $21,300,420 is now due.

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 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 owner

The PincusCo database currently indicates that Joseph Torres owned at least three commercial properties with 110 residential units in New York City with 132,051 square feet and a city-determined market value of $32 million. (Market value is typically about 50% of actual value.) The portfolio has $18.5 million in debt, borrowed from Citibank. Within the portfolio, the bulk, or 44 percent of the 132,051 square feet of built space are walkup properties, with elevator properties next occupying 36 percent of the space. They are all located in Brooklyn.

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.

The surrounding

Within a 400-foot radius of 27 Jay Street, PincusCo identified two commercial real estate items of interests occurred over the past 24 months. Of those two items, one was in new building development. It was a new building permit issued on October 4, 2021 for a 184,467-square-foot business (B) building at 29 Jay Street. One of those two items was a loan which Edward J. Minskoff Equities borrowed $138 million from AIG secured by the 21,735-square-foot development site (V1) on 35 Jay Street on October 29, 2021.

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