Invesco, partner buy 63% stake in fee positions valued at $52M under two NYC dev sites

Invesco and an unnamed “major Canadian investor” partnered to buy a 63% stake in the fee positions valued at $52 million owned by Montgomery Street Partners under two ground-leased development sites, one in the Bronx and in Brooklyn, in two separate transactions.

In the larger, Invesco Real Estate through the entity IRE U.S. Fund VI GLR, LLC acquired a 63 percent stake in a ground lease valued at $35 million from Montgomery Street Partners through the entity Ground Lease Reit Inc. for the development site at 138 Bruckner Boulevard in Mott Haven, Bronx. Jacob Schwimmer filed plans in December 2021 for a 447-unit, 422,592-square-foot residential building on the property.

The deal closed on May 3, 2022 and was recorded on June 9, 2022.
Montgomery Street bought the fee on January 13, 2022, for $35 million. This is a 63% transfer. Ground Lease REIT is a part of Montgomery Street Partners. An unnamed “major Canadian investor” was also involved as buyer, according to a report from Real Assets.

In the second transaction, Invesco Real Estate through the entity IRE U.S. Fund VI Glr, LLC acquired a 63 percent stake in a ground lease valued at $17 million from Montgomery Street Partners through the entity Ground Lease Reit Inc. for the development site at 2700 Atlantic Avenue in East New York, Brooklyn. Joel Schwartz filed plans for a 227-unit, 158,730 square-foot residential building (R-2) on September 14, 2020.
The deal closed on May 3, 2022 and was recorded on June 9, 2022.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Invesco Real Estate purchased 44 properties in five transactions for a total of $148.5 million and has no record it sold any properties over the past 24 months.
The seller Montgomery Street Partners purchased four properties in three transactions for a total of $127.2 million and sold two properties in one transactions for a total of $35 million over the same time period. The 39,375-square-foot property generated revenue of $472,106 or $12 per square foot, according to the most recent income and expense figures.

The property

The 138 Bruckner Boulevard parcel has frontage of 175 feet and is 200 feet deep with a total lot size of 35,000 square feet. The zoning is M1-5/R8A which allows for up to 5 times floor area ratio (FAR) for manufacturing and up to 6.02 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $1.6 million.The most recent loan totaled $105 million and was provided by S3 Capital on January 13, 2022.

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 four DOB violations and $11,550 in OATH penalties in the last year.

Development

On these lots, there is one active new building construction project for a 447-unit, 422,592-square-foot R-2 building. The project was developed by Jacob Schwimmer with plans filed December 22, 2021 and it has not been permitted yet.

The neighborhood

In Mott Haven, the bulk, or 38 percent of the 43.4 million square feet of commercial built space are residential elevator buildings, with industrial buildings next occupying 23 percent of the space. In sales, Mott Haven has 2.7 times the average sales volume among other neighborhoods with $744 million in sales volume in the last two years and is the highest in Bronx. For development, Mott Haven is the 7th most active neighborhood among other neighborhoods. It had 4.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 10 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of eight of the 20 commercial properties representing 81,088 square feet of the 179,948 square feet. The largest owner is East Coast Holdings, followed by Montgomery Street Partners and then Altmark Group. There are two active new building construction projects totaling 599,745 square feet. The largest is a 224-unit, 177,153-square-foot R-2 building developed by Isaac Feuerwerger with plans filed September 26, 2019 and it has not been permitted yet.The second largest is a 447-unit, 422,592-square-foot R-2 building developed by Jacob Scwhimmer with plans filed December 22, 2021 and it has not been permitted yet.

the majority, or 88 percent of the 179,948 square feet of built space are industrial buildings, with residential walkup buildings next occupying 12 percent of the space.

The seller

The PincusCo database currently indicates that Montgomery Street Partners owned at least four commercial properties with 211,680 square feet and a city-determined market value of $19.7 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 76 percent of the 211,680 square feet of built space are specialty properties, with industrial properties next occupying 19 percent of the space. The bulk, or 81 percent of the built space, is in Brooklyn, with Bronx next at 19 percent of the space.

The buyer

The PincusCo database currently indicates that Invesco Real Estate owned at least seven commercial properties with 176,524 square feet and a city-determined market value of $46.2 million. (Market value is typically about 50% of actual value.) The portfolio has $115 million in debt, borrowed from Fifth Third Bank. Within the portfolio, the bulk, or 81 percent of the 176,524 square feet of built space are office properties, with elevator properties next occupying 12 percent of the space. The bulk, or 88 percent of the built space, is in Manhattan, with Bronx next at 12 percent of the space.

Surrounding

Within a 400-foot radius of 138 Bruckner Boulevard, Pincusco identified one commercial real estate item of interests occurred over the past 24 months.
It was a loan which Altmark Group borrowed $9 million from Lakeland Bank secured by the 14,550-square-foot industrial (Z9) on 122 Bruckner Boulevard and two other properties on February 4, 2022.

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