Goldman Sachs acquires 72.3% stake from Domain, Mega valued at $30.4M for 268-unit project in Gowanus

Goldman Sachs through the entity Riverside Drive Opportunity Zone Solutions LLC acquired a 72.3 percent interest from the Domain Companies and Mega Contracting Group through the entity 545 Sackett JV Member LLC valued at $30.4 million for the development site composed of the industrial building (F4) at 537-545 Sackett Street in Gowanus, Brooklyn, industrial building (GU) at 560-580 Degraw Street in Gowanus, Brooklyn, and industrial building (G7) at 553 Sackett Street in Gowanus, Brooklyn.

On these lots, there is one active new building construction project for a 268-unit, 312,858-square-foot R-2 building. The project was developed by Peter Papamichael with plans filed October 28, 2021 and it has not been permitted yet.

The deal closed on July 21, 2022 and was recorded on August 18, 2022. The three properties have 48,050 square feet of built space and 125,870 square feet of additional air rights for a total buildable of 174,000 square feet according to PincusCo analysis of city data. The sale price per built square foot is $631 and the price per buildable square foot is $174 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.)
Goldman Sachs through its entity Riverside Drive Opportunity Zone Solutions bought a 72.3 percent stake in the property.

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 560-580 Degraw Street.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Goldman Sachs purchased one properties in one transactions for a total of $17.4 million and sold one properties in one transactions for a total of $116.5 million over the past 24 months.
The seller Domain Companies purchased one properties in one transactions for a total of $12.2 million and had not sold any properties over the same time period.

The property

The 560-580 Degraw Street parcel has frontage of 350 feet and is 100 feet deep with a total lot size of 38,500 square feet. The lot is irregular. 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 $1.5 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties since September of 2020. In addition, according to city public data, the properties have received four DOB violations, $2,500 in ECB penalties, and $15,730 in OATH penalties in the last year.

The neighborhood

In Gowanus, the bulk, or 47 percent of the 9.3 million square feet of commercial built space are industrial buildings, with elevator buildings next occupying 19 percent of the space. In sales, Gowanus has 1.2 times the average sales volume among other neighborhoods with $398 million in sales volume in the last two years and is the 16th highest in Brooklyn. For development, Gowanus is the 6th most active neighborhood among other neighborhoods. It had 5.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 60 percent of the neighborhood’s built space.

The block

On the tax block of 560-580 Degraw Street, PincusCo has identified the owners of two of the six commercial properties representing 41,050 square feet of the 68,214 square feet. The identified owner is Domain Companies.
There are three active new building construction projects totaling 745,666 square feet. The largest is a 67-unit, 47,914-square-foot R-2 building developed by Abe Lipton with plans filed May 4, 2022 and it has not been permitted yet.The second largest is a 291-unit, 384,894-square-foot R-2 building developed by Marino Mazzei with plans filed February 4, 2022 and it has not been permitted yet.

the majority, or 83 percent of the 68,214 square feet of built space are industrial buildings, with retail buildings next occupying 17 percent of the space.

The seller

The PincusCo database currently indicates that Domain Companies owned at least 15 commercial properties in New York City with 513,372 square feet and a city-determined market value of $67.5 million. (Market value is typically about 50% of actual value.) The portfolio has $192.8 million in debt, with top three lenders as PNC Bank, Carmel Partners, and Fundamental Advisors respectively. Within the portfolio, the bulk, or 48 percent of the 513,372 square feet of built space are rental condo properties, with elevator properties next occupying 41 percent of the space. The bulk, or 97 percent of the built space, is in Brooklyn, with Queens next at 2 percent of the space.
The PincusCo database currently indicates that Mega Contracting Group owned at least one commercial property in New York City with 0.0 square feet and a city-determined market value of $475,000. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single industrial property.

The buyer

The PincusCo database currently indicates that Goldman Sachs owned at least two commercial properties in New York City with 2,157,862 square feet and a city-determined market value of $621.3 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 100 percent of the 2,157,862 square feet of built space are office properties, with development properties next occupying 0 percent of the space. They are all located in Manhattan.

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