Fortress acquires Heritage’s East Williamsburg dev site valued at $25.5M

Fortress Investment Group through the entity DB 215 Moore Reo LLC, acquired through a foreclosure sale the 10-parcel development site including the mixed-use building (K4) at 215 Moore Street, the mixed-use building (K4) at 225 Moore Street and the mixed-use building (K4) at 201 Moore Street in East Williamsburg, Brooklyn. The transfer value was $25.5 million. Fortress had been the note holder on a $35 million loan originally provided to Toby Moskovits’s Heritage Equity Partners in 2016, which Fortress bought in 2019 and foreclosed on the property.
The transfer closed on October 2, 2023 and was recorded on October 13, 2023. The 10 properties have 68,002 square feet of built space and 65,406 square feet of additional air rights for a total buildable of 133,396 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $374 and the price per buildable square foot is $191 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 the court sale was the attorney Jeffrey R. Miller. The signatory for Fortress Investment Group was David Sims. The contract date was August 17, 2023, the date of the auction. Heritage Equity Partners purchased the site for $28.25 million in 2014. Fortress acquired the property as the lender through a foreclosure case, Brooklyn 520671/2019. The total due in the foreclosure was $48 million according to the notice of sale. The auction was held on August 17, 2023.
Fortress Investment Group financed the transfer with a $17.4 million acquisition loan from Axos Bank.

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 215 Moore Street.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Fortress Investment Group purchased one property in one transaction for a total of $598.2 million and has no record it sold any properties over the past 24 months.
The seller Heritage Equity Partners had not purchased any other properties and sold or lost three properties in two transactions for a total of $137.5 million over the same time period. Out of the 10 properties, two with a total of 68,002 square feet of built space generated revenue of $435,516 per year.

The property

The mixed-use building in East Williamsburg has 68,002 square feet of built space and 65,406 square feet of additional air rights for a total buildable of 133,396 square feet according to a PincusCo analysis of city data. The parcel has frontage of 178 feet and is 100 feet deep with a total lot size of 17,854 square feet. The zoning is M1-2 which allows for up to 2 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $3.6 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties for the past 24 months. In addition, according to city public data, the properties have received 10 DOB violations, $1.5 million in ECB penalties, and $14,635 in OATH penalties in the last year.

Development

On these lots, there is one active major alteration construction project for a 26,136 square-foot B building. The project was submitted by Allen Konstam with plans filed May 3, 2016 and permitted December 9, 2016.

The neighborhood

In East Williamsburg, The majority, or 62 percent of the 17 million square feet of commercial built space are industrial buildings, with walkup buildings next occupying 11 percent of the space. In sales, East Williamsburg has 1.2 times the average sales volume among other neighborhoods with $412.4 million in sales volume in the last two years and is the 19th highest in Brooklyn. For development, East Williamsburg has near average amount of major developments among other neighborhoods and is the 16th highest in Brooklyn. It had 1 million square feet of commercial and multi-family construction under development in the last two years, which represents 6 percent of the neighborhood’s built space.

The block

On the tax block of 215 Moore Street, PincusCo has identified the owners of two of the 19 commercial properties representing 130,673 square feet of the 268,723 square feet. The two identified owners are Jennifer Lewin and Aview Equities.
On the tax block, there was one new building construction project filed totaling 84,275 square feet. It is a 150-unit, 84,275 square-foot hotel/dormitory/shelter (R-1) building submitted by Heritage Equity Partners and filed by Allen Konstam with plans filed May 27, 2015 and permitted July 1, 2016.

The majority, or 54 percent of the 268,723 square feet of built space are hotel buildings, with mixed-use buildings next occupying 25 percent of the space.

The seller

The PincusCo database currently indicates that Heritage Equity Partners owned at least one commercial property in New York City with 20,555 square feet and a city-determined market value of $1.4 million. (Market value is typically about 50% of actual value.) The portfolio has $8 million in debt, borrowed from Be-Aviv. The portfolio consists of at least a single industrial property. It is located in Bronx.

The buyer

The PincusCo database currently indicates that Fortress Investment Group owned at least three commercial properties with 594 residential units in New York City with 589,218 square feet and a city-determined market value of $132.3 million. (Market value is typically about 50% of actual value.) The portfolio has $377.9 million in debt, borrowed from Northwind Group and MetLife. Within the portfolio, all identified are elevator properties. They are all located in Manhattan.

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