Capstone Equities buys $88.9M note on Nightingale’s Whale in Sunset Park

Capstone Equities through the entity 14 53rd Street LLC bought a note with an original principal of $88.9 million from TPG Real Estate Partners secured by Nightingale Properties’ office (O6) property the Whale Building at 14 53rd Street in Sunset Park, Brooklyn.
The deal closed on May 17, 2023 and was recorded on May 26, 2023. The prior lender was TPG Real Estate Partners which held debt that had an original loan amount of $88.9 million.
The property has 382,080 square feet of built space according to a PincusCo analysis of city data. The loan price per built square foot is $zero 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.)
Nightingale Properties bought the building on September 25, 2020, for $84.1 million, but the seller Madison Realty Capital retained a 25 percent stake, according to news reports from the time. The signatory for Nightingale Properties was Elchonon Schwartz. The signatory for Capstone Equities was Justin Adelipour. Nightingale brought two cases, one against TPG and another against Capstone, and both were dismissed. The judge dismissed the suit against TPG entirely, and against Capstone against all causes except a claim Nightingale brought against Capstone for “unfair competition,” which survives.

The property

The office building in Sunset Park has 382,080 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 621 feet and is 181 feet deep with a total lot size of 112,665 square feet. The zoning is M3-1 which allows for up to 2 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $41.4 million. The most recent loan totaled $88.9 million and was provided by TPG Real Estate Partners on September 25, 2020.

Violations and lawsuits

The property was involved in two lawsuits and zero bankruptcies over the past two years. The highest value suit was a $22 million money judgment concerning a note sale filed on January 20, 2023, by Nightingale Properties against TPG Capital. In addition, according to city public data, the property has received one DOB violation and $2,805 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on August 28, 2018. On the lot, there is one active major alteration construction project for a 390,237 square-foot F-2 building. The project was submitted by Daniel Cobleigh with plans filed January 13, 2016 and permitted April 12, 2017.

The neighborhood

In Sunset Park, The bulk, or 30 percent of the 34 million square feet of commercial built space are industrial buildings, with specialty buildings next occupying 24 percent of the space. In sales, Sunset Park has near average sales volume among other neighborhoods with $406.7 million in sales volume in the last two years and is the 18th highest in Brooklyn. For development, Sunset Park has had very little major development activity relative to other neighborhoods.It had 763,679 square feet of commercial and multi-family construction under development in the last two years, which represents 2 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the 13 commercial properties representing 489,389 square feet of the 589,383 square feet. The two identified owners are Nightingale Properties and City of New York.
There are no active new building construction projects on this tax block.

The majority, or 65 percent of the 589,383 square feet of built space are office buildings, with specialty buildings next occupying 21 percent of the space.

The borrower

The PincusCo database currently indicates that Nightingale Properties owned at least five commercial properties in New York City with 1,459,346 square feet and a city-determined market value of $207.2 million. (Market value is typically about 50% of actual value.) The portfolio has $106.9 million in debt, borrowed from TPG Real Estate Partners and East West Bank. Within the portfolio, the bulk, or 100 percent of the 1,459,346 square feet of built space are office properties, with specialty properties next occupying 0 percent of the space. The bulk, or 74 percent of the built space, is in Manhattan, with Brooklyn next at 26 percent of the space.

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