Akkads put Gowanus loft in bankruptcy to halt $36M judgment auction

Owners Benjamin Akkad and Nathan Accad filed a bankruptcy petition yesterday in Brooklyn to halt an auction set for today, October 4, 2023, scheduled to satisfy a $36.2 million judgment awarded to developer Sam Boymelgreen over a 2013 ground lease at 255 Butler Street in Gowanus, Brooklyn. Boymelgreen requested in court filings to make a credit bid for the property using the $36.2 million judgment.

Nathan Accad’s name is also spelled Nathan Akkad in court filings, but was spelled Nathan Accad in the bankruptcy filing.

The petitioners claim the building is worth about $30 million, but the building has secured and unsecured creditors totaling $50.5 million. The owners filed the Chapter 11 petition to halt the sale following a string of legal defeats in State Supreme Court and State Appellate Court.

According to the filing, “The filing of the instant Chapter 11 petition is the only option available to the Debtor to maintain the status quo at least in the near term. If necessary, the Debtor is prepared to sell the Property under Bankruptcy Court auction process rather than face a distressed sale scenario.”

Chapter 11 LINK

Case 1-23-43575-ess. The other court cases are the net lease dispute, 511560/2015 and the foreclosure action, 511468/2023.

The Akkad family’s 255 Butler LLC as landlord signed a 49-year net lease with Sam Boymelgreen in March 2013, valued at $7 million. Boymelgreen sought to bring the co-working company WeWork to the building, but, according to court records the Akkads wanted to cut him out of the deal, with years of litigation ensuing, resulting in the March 2023 ruling awarding $36.2 million to Boymelgreen.

The following month, in April 2023, lender Cathay Bank filed to foreclose on a loan to the Akkads with an original principal of $11 million, and in June 2023, Maguire Capital Group bought the note, then stepped into the role of lender pursuing the foreclosure. The current total due on the loan is $13.5 million, according to the bankruptcy filing.

The property

The industrial building in Gowanus has 99,500 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 200 feet and is 200 feet deep with a total lot size of 37,500 square feet. The lot is irregular. The city-designated market value for the property in 2022 is $12.7 million.

Violations

According to city public data, the property has received 15 DOB violations, $2.6 million in ECB penalties, and $38,010 in OATH penalties in the last year.

The neighborhood

In Gowanus, The bulk, or 46 percent of the 9.2 million square feet of commercial built space are industrial buildings, with elevator buildings next occupying 19 percent of the space. In sales, Gowanus has near average sales volume among other neighborhoods with $708.6 million in sales volume in the last two years and is the 8th highest in Brooklyn. For development, Gowanus is the 6th most active neighborhood among other neighborhoods. It had 4.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 50 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 23 commercial properties representing 121,393 square feet of the 178,156 square feet. The largest owner is Benjamin Akkad, followed by MacArthur Holdings and then Mohamed Esa. There are no active new building construction projects on this tax block.

The owner

The PincusCo database currently indicates that Benjamin Akkad owned at least one commercial property in New York City with 99,500 square feet and a city-determined market value of $12.7 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single industrial property. It is located in Brooklyn.

The surrounding

Within a 400-foot radius of 498 Baltic Street, PincusCo identified seven commercial real estate items of interests occurred over the past 24 months. Of those seven items, three were sales above $5 million totaling $44.7 million. The most recent of the three was Canyon Partners which bought the 2,500-square-foot, one-unit industrial (G1) on 251 Douglas Street for $30.5 million from Tavros Capital and Charney Companies on July 26, 2023. Of those seven items, four were loans above $5 million totaling $162.3 million. The most recent of the four was Tavros Capital, Charney Companies, and Canyon Partners in which borrowed $119.9 million from MassMutual secured by the 2,500-square-foot, one-unit industrial (G1) on 251 Douglas Street on July 28, 2023.

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