Apollo, Witkoff formally take title to RedSky, JZ Capital’s Downtown Brooklyn 592-unit dev site valued at $144M

Apollo Global Management and Witkoff through the entity Brook NY Residential LLC formally took title to the development site at 589 Fulton Street in Downtown Brooklyn valued at $144.4 million from RedSky Capital and JZ Capital through the entity Redsky JZ Fulton SPE. Apollo had initiated foreclosure proceedings and this transfer is Apollo obtaining official control.

On these lots, there is one active new building construction project for a 592-unit, 597,824-square-foot R-2 building. The project was developed by Craig Murphy of Witkoff with plans filed August 27, 2021 and it has not been permitted yet.
The property transfer closed on August 3, 2022 and was recorded on August 19, 2022.
The signatory for the former owner entity was Apollo’s Jeffrey Horowitz. The signatory for Apollo Global Management and Witkoff was Jeffrey Horowitz. This is Apollo Global Management, the prior lender to developers RedSky Capital and JZ Capital, taking control of the development site. The prior senior recorded debt was $143.3 million, according to a PincusCo analysis of loans.

The Real Deal reported in March 2020 that the loan, totaling $154.3 million, was in default. There were state court foreclosure proceedings. The transfer is from one entity in care of Apollo to another, but there were full transfer taxes paid totaling more than $4.7 million. The Real Deal reported in May 2022 based on Green Street that that Apollo and Witkoff were looking for a $420 million construction loan.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Apollo Global Management had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller RedSky Capital purchased 16 properties in one transactions for a total of $18.4 million and sold 21 properties in five transactions for a total of $368 million over the same time period.

Violations

According to city public data, the properties have received $10,000 in ECB penalties in the last year.

The neighborhood

In Downtown Brooklyn, the bulk, or 40 percent of the 24.3 million square feet of commercial built space are office buildings, with elevator buildings next occupying 25 percent of the space. In sales, Downtown Brooklyn has 2.8 times the average sales volume among other neighborhoods with $946.2 million in sales volume in the last two years and is the 4th highest in Brooklyn. For development, Downtown Brooklyn has 3.4 times the average amount of major developments relative to other neighborhoods and is the 5th highest in Brooklyn. It had 3.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 15 percent of the neighborhood’s built space.

The block

On the development site tax block, PincusCo has identified the owners of 23 of the 29 commercial properties representing 1,217,395 square feet of the 2,432,228 square feet. The largest owner is Brodsky Organization, followed by RedSky Capital and then Acadia Realty Trust.

The majority, or 88 percent of the 755,830 square feet of built space are elevator buildings, with mixed-use buildings next occupying 12 percent of the space.

The seller

The PincusCo database currently indicates that Redsky Capital owned at least 13 commercial properties in New York City with 29,893 square feet and a city-determined market value of $8.1 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 100 percent of the 29,893 square feet of built space are mixed-use properties, with development properties next occupying 0 percent of the space. They are all located in Brooklyn.

The buyer

The PincusCo database currently indicates that Apollo Global Management owned at least one commercial property in New York City with 1,396,625 square feet and a city-determined market value of $59.4 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single elevator property. It is located in Manhattan.

Direct link to Acris document. link