Arch buys stakes in 3 foreclosed Bushwick developments acquired by Balthasar valued at $34.2M

Arch Companies acquired stakes in three foreclosed Bushwick developments acquired by new owner Balthasar Capital Fund Management valued at $34.2 million. The investment was made through three separate entity-level. Arch Companies is led by Jeffrey Simpson, and Balthasar is led by Denis Saklakov.

In the largest of the three transfers, Arch Companies through the entity Midtown Oaks JV LLC acquired an interest from Balthasar Capital Fund Management through the entity 1351 Dekalb Condo Development Holdings LLC valued at $12.5 million for the 27-unit residential elevator building (D6) at 1357 Dekalb Avenue in Bushwick, Brooklyn.
The deal closed on August 26, 2022 and was recorded on September 27, 2022. The property has 26,053 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $481 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 signatory for Balthasar Capital Fund Management was Denis Saklakov. The signatory for Arch Companies was Jeffrey Simpson. Arch Companies bought a stake in the development, which PincusCo estimates is approximately 46 percent, based on the city transfer tax. Denis Saklakov created the seller company in June 2022.
BK 38th Lender LLC filed to foreclose in 2020.  S3 Capital was the original lender, but it sold the note, and the note buyer pursued foreclosure. Igor Agopov was the original developer and loan guarantor.

In a statement to PincusCo, Balthasar said, “We are happy to confirm that [in] the course of the foreclosure litigation we have stepped in as a buyout partner and managed to complete a successful restructuring and a further funding of the project. We are looking forward to doing business with Arch Companies and we are excited about the prospective of the application of the sustainable energy solutions in this development.”

Arch Companies responded to our request for comment, but has not yet provided a statement.

In the second transfer, Arch Companies through the entity Midtown Oaks JV LLC acquired an interest from Balthasar Capital Fund Management through the entity Bushwick 1010 Holdings LLC valued at $11.7 million for the 13-unit residential elevator building (D7) at 1010 Bushwick Avenue in Bushwick, Brooklyn. The deal closed on August 26, 2022 and was recorded on September 27, 2022.The property has 20,191 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $579 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 property on June 9, 2016, for $2 million.

In the third transfer, Arch Companies through the entity Midtown Oaks Jv LLC acquired an interest from Balthasar Capital Fund Management through the entity 435 Central Condo Development Holdings LLC valued at $9.99 million for the 17-unit residential elevator building (D3) at 431 Central Avenue in Bushwick, Brooklyn. The deal closed on August 26, 2022 and was recorded on September 27, 2022. The property has 14,955 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $668 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.)

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 1351 Dekalb Avenue.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Arch Companies purchased four properties in four transactions for a total of $63.2 million and sold one properties in one transactions for a total of $31.1 million over the past 24 months.
The seller Balthasar Capital Fund Management had not purchased any other properties and had not sold any properties over the same time period.

Violations and lawsuits

According to city public data, the 1357 Dekalb Avenue property has received one DOB violation, $46,000 in ECB penalties, and $46,790 in OATH penalties in the last year.

Development

On these lots, there are two active new building construction projects and major alteration projects with initial costs more than $5 million, totaling 36,772 square feet. The largest is a new building project for a 27-unit, 18,986 square-foot R-2 building developed by Denis Portaev with plans filed August 15, 2017 and permitted April 19, 2019.

The block

On the tax block of 1351 Dekalb Avenue, PincusCo has identified the owners of 14 of the 27 commercial properties representing 44,171 square feet of the 110,705 square feet. The largest owner is Minotaur Management, followed by Fai Chan and then Linda Vera-Benitez.
On the tax block, there were six new building construction projects totaling 58,155 square feet. The largest is a 27-unit, 18,986-square-foot R-2 building developed by Denis Portaev with plans filed August 15, 2017 and permitted April 19, 2019. The second largest is a 27-unit, 17,786-square-foot R-2 building developed by Joel Brach with plans filed March 3, 2016 and it has not been permitted yet.

The majority, or 55 percent of the 110,705 square feet of built space are walkup buildings, with elevator buildings next occupying 24 percent of the space.

The buyer

The PincusCo database currently indicates that Arch Companies owned at least 10 commercial properties in New York City.(Market value is typically about 50% of actual value.) The portfolio has $141.4 million in debt, with top three lenders as Madison Realty Capital, CIM Group, and Valley National Bank respectively. Within the portfolio, the bulk, or 72 percent of the 97,743 square feet of built space are office properties, with walkup properties next occupying 18 percent of the space. The bulk, or 78 percent of the built space, is in Manhattan, with Brooklyn next at 12 percent of the space.

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