Arch Companies pays $22.3M to AB Capstone for dev site in Sheepshead Bay

Arch Companies through the entity King Hwy Development 4 LLC paid $22.3 million to AB Capstone through the entity Kings Hwy Development LLC for the development building (V1) at 1633 East 16th Street in Sheepshead Bay, Brooklyn.
The deal closed on August 25, 2022 and was recorded on September 12, 2022. The property has zero square feet of built space and 31,301 square feet of additional air rights for a total buildable of 31,301 square feet according to PincusCo analysis of city data. The sale price per built square foot is $N/A and the price per buildable square foot is $714 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 January 31, 2019, for $8.5 million. The signatory for AB Capstone was Meir Babaev. The signatory for Arch Companies was Jeffrey Simpson.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Arch Companies purchased six properties in four transactions for a total of $95.8 million and sold one property in one transaction for a total of $31.1 million over the past 24 months.
The seller AB Capstone had not purchased any other properties and sold five properties in three transactions for a total of $59.9 million over the same time period.

The property

The 1633 East 16th Street parcel has frontage of 292 feet and is 108 feet deep with a total lot size of 23,186 square feet. The lot is irregular. The zoning is R5B which allows for up to 1.35 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $1.1 million.

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 $2,250 in ECB penalties and $2,550 in OATH penalties in the last year.

The neighborhood

In Sheepshead Bay, the bulk, or 43 percent of the 25.8 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 17 percent of the space. In sales, Sheepshead Bay has had very little sales volume relative to other neighborhoods with $271.1 million in sales volume in the last two years. For development, Sheepshead Bay has had very little major development activity relative to other neighborhoods.It had 726,072 square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 14 commercial properties representing 88,198 square feet of the 233,086 square feet. The largest owner is Jeff Sutton, followed by Joseph Lazarus and then Ramin Shillian.
There is one active new building construction project totaling 67,989 square feet. It is a zero-unit, 67,989-square-foot M building developed by Walter Schik with plans filed March 13, 2014 and permitted March 10, 2017.

The majority, or 58 percent of the 233,086 square feet of built space are office buildings, with walkup buildings next occupying 22 percent of the space.

The seller

The PincusCo database currently indicates that AB Capstone owned at least six commercial properties in New York City with 317,173 square feet and a city-determined market value of $32.8 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 47 percent of the 317,173 square feet of built space are specialty properties, with retail properties next occupying 20 percent of the space. The bulk, or 53 percent of the built space, is in Queens, with Bronx next at 47 percent of the space.

The buyer

The PincusCo database currently indicates that Arch Companies owned at least nine commercial properties in New York City with 97,743 square feet and a city-determined market value of $32 million. (Market value is typically about 50% of actual value.) The portfolio has $130.6 million in debt, with top three lenders as Madison Realty Capital, CIM Group, and First Republic 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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