A&E closes on $81.6M of expected $250M Brooklyn portfolio purchase from LeFrak

A&E Real Estate Holdings paid $81.65 million to LeFrak for three residential elevator buildings in Sheepshead Bay and Gravesend, Brooklyn, with a total of 401 units. This is the first of an expected $250 million sale reported by the Commercial Observer in April when the portfolio went into contract.

The debt on these three buildings rose from just $13.7 million when LeFrak owned them to $54.7 million, provided by Signature Bank, with the new acquisition.

In the first transaction, A&E Real Estate Holdings through the entity 2750 Homecrest Avenue, LLC paid $38.7 million to LeFrak through the entity Hollywood Plaza Housing Company, L.P. for the 188-unit residential elevator building (D1) at 2750 Homecrest Avenue in Sheepshead Bay, Brooklyn.
The deal closed on November 7, 2022 and was recorded on November 16, 2022. The property has 194,425 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $199 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

In the second, A&E Real Estate Holdings through the entity 2375 East 3rd Street, LLC paid $27.6 million to LeFrak through the entity Dover Leasing Limited Partnership for 135-unit residential elevator building (D1) at 2375 East 3rd Street in Gravesend, Brooklyn.
The deal closed on November 7, 2022 and was recorded on November 16, 2022.The property has 112,320 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $245 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

In the third, A&E Real Estate Holdings through the entity 2815 Coyle Street, LLC paid $15.3 million to LeFrak through the entity Mount Vernon Shopping Center Delaware LLC for 78-unit residential elevator building (D1) at 2815 Coyle Street in Sheepshead Bay, Brooklyn.
The deal closed on November 7, 2022 and was recorded on November 16, 2022.The property has 67,000 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $228 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

The seller bought the 2815 Coyle Street property on December 12, 2008, for $9 million. The signatory for LeFrak was Arnold S. Lehman. The signatory for A&E Real Estate Holdings was Alex T. Bruce. The contract was signed April 5, 2022. LeFrak developed some of these buildings, including 2750 Homecrest Avenue, which it built in 1959.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer A&E Real Estate Holdings purchased 10 properties in seven transactions for a total of $927 million and sold 40 properties in one transactions for a total of $14.2 million over the past 24 months.
The seller LeFrak had not purchased any other properties and had not sold any properties over the same time period. The former owners according to the Department of Housing Preservation and Development includes Joseph Rooney, head officer and Margaret Broda, officer. The business entities are Estates Ny Real Estate Services Llc and Hollywood Plaza Housing Co., L.P. The 194,425-square-foot property generated revenue of $3.6 million or $18 per square foot, according to the most recent income and expense figures.

The property

The 2750 Homecrest Avenue parcel has frontage of 392 feet and is 110 feet deep with a total lot size of 53,730 square feet. The lot is irregular. The zoning is R6 which allows for up to 2.43 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $11.1 million.The most recent loan totaled $7.6 million and was provided by Wells Fargo on July 15, 2021.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received two DOB violations, $1,250 in ECB penalties, 19 housing violations, and $1,680 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The block

On this tax block, PincusCo has identified the owners of three of the three commercial properties representing 388,850 square feet of the 388,850 square feet. The two identified owners are LeFrak and Lay Assets.
On the tax block, there was one new building construction project filed totaling 41,848 square feet. It is a 45-unit, 41,848-square-foot R-2 building developed by Eddie Yair with plans filed May 22, 2020 and permitted August 26, 2021.

The majority, or 100 percent of the 388,850 square feet of built space are elevator buildings.

The seller

The PincusCo database currently indicates that Lefrak owned at least 74 commercial properties in New York City with 11,487,850 square feet and a city-determined market value of $1.6 billion. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 90 percent of the 11,487,850 square feet of built space are elevator properties, with office properties next occupying 9 percent of the space. The bulk, or 52 percent of the built space, is in Queens, with Manhattan next at 31 percent of the space.

The buyer

The PincusCo database currently indicates that A&E Real Estate Holdings owned at least 162 commercial properties in New York City with 13,043,872 square feet and a city-determined market value of $1.5 billion. (Market value is typically about 50% of actual value.) The portfolio has $2.7 billion in debt, with top three lenders as Signature Bank, JPMorgan Chase, and Mesa West Capital respectively. Within the portfolio, the bulk, or 73 percent of the 13,043,872 square feet of built space are elevator properties, with walkup properties next occupying 26 percent of the space. The bulk, or 54 percent of the built space, is in Queens, with Manhattan next at 34 percent of the space.

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