Avanath Capital buys $101.2M ground lease from Brodsky for 251-unit rental in Downtown Brooklyn

Avanath Capital Management through the entity Avanath 7 Dekalb, LLC acquired a $101.2 million ground lease from the Brodsky Organization through the entity 7 Dekalb Owners LLC for the 251-unit rental condo unit at 70 Fleet Street in Downtown Brooklyn, Brooklyn.
The deal closed on January 11, 2023 and was recorded on January 23, 2023. The condo unit has 245,274 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $412 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 Brodsky Organization was Daniel Brodsky. The signatory for Avanath Capital Management was Wesley Wilson. This is the assignment of a an approximately 65-year lease originally signed in 2013. The landlord is the City of New York.
Avanath assumed a $58 million loan from Fannie Mae.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Avanath Capital Management purchased 11 properties in four transactions for a total of $314.5 million and has no record it sold any properties over the past 24 months.
The seller Brodsky Organization had not purchased any other properties and sold one property in one transaction for a total of $3 million over the same time period.

The property

The 70 Fleet Street parcel has a total lot size of 245,274 square feet. The city-designated market value for the property in 2022 is $34.3 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 not received any significant violations in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on September 14, 2012. On the lot, there is one active new building construction project for a 1,010,891 square-foot M building. The project was developed by Robert Masters with plans filed September 19, 2011 and permitted May 3, 2013.

The block

On this tax block, PincusCo has identified the owners of 23 of the 30 commercial properties representing 1,189,415 square feet of the 2,404,306 square feet. The largest owner is Brodsky Organization, followed by Acadia Realty Trust and then RedSky Management.
On the tax block, there were five new building construction projects totaling 3,671,969 square feet. The largest is a 483-unit, 1,584,889-square-foot R-2 building developed by David Rothstein with plans filed December 15, 2015 and permitted November 3, 2017. The second largest is a zero-unit, 1,010,891-square-foot M building developed by Robert Masters with plans filed September 19, 2011 and permitted December 12, 2012.

The majority, or 91 percent of the 736,660 square feet of built space are elevator buildings, with mixed-use buildings next occupying 9 percent of the space.

The seller

The PincusCo database currently indicates that Brodsky Organization owned at least 39 commercial properties in New York City with 5,618,976 square feet and a city-determined market value of $1 billion. (Market value is typically about 50% of actual value.) The portfolio has $591.1 million in debt, with top three lenders as AXA Equitable, Bank of New York Mellon, and Athene Annuity And Life Company respectively. Within the portfolio, the bulk, or 97 percent of the 5,618,976 square feet of built space are elevator properties, with walkup properties next occupying 3 percent of the space. The bulk, or 79 percent of the built space, is in Manhattan, with Brooklyn next at 21 percent of the space.

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