Jack Guttman takes stake in RFR, Kushner Dumbo building valued at $33.75M

RFR Holding and Kushner Companies brought low-profile Brooklyn investor Jack Guttman of Pearl Realty Management in as an investor with an unknown stake in the Dumbo, Brooklyn, office building at 81 Prospect Street, according to a PincusCo analysis of city property records. The transfer price was $33.75 million.

According to the transfer documents, RFR Holding and Kushner Companies through a jointly owned entity RFR/K 81 Prospect Owner LLC and its 46.57 percent stake; and RFR Holding through the entity RFR 81 Prospect Owner LLC with its 37.72 percent stake, and Kushner Companies through the entity KC 81 Prospect Owner LLC with its 15.71 percent stake, sold the property to a new entity, 81 Prospect LLC, at the address of Jack Guttman.

Jack Guttman is a major property owner in New York City with scores of buildings in multiple boroughs, actively involved in buying and selling assets.

The signatory for the seller entities was RFR Holding executive Richard Froom, and for the buyer the signatory was Kushner Companies’ Ben Curtiss.

The deal closed on May 28, 2024 and was recorded on June 18, 2024. The property has 93,107 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $362 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.)

This building is one of four that The Real Deal first reported last month had obtained $480 million in financing, including for a securitized loan in a maturity default. The news reports called the financing an extension, but a document filed with 81 Prospect Street indicated the building had been removed the securitized loan trust.

RFR Holding, Kushner Companies and Jack Guttman did not immediately respond to a request for comment.

According to a Morningstar report published before the new financing, “The loan has consistently reported depressed cash flows for several years, with the debt service coverage ratio (DSCR) hovering near or just below breakeven since 2021. The reported occupancy rate has ranged between 86% and 91% for the past three years, compared with 94% at issuance. Given the recent WeWork departure, Morningstar DBRS expects cash flow to decline further from issuance expectations. According to the November 2023 appraisal, the portfolio had an as-is value of $255.6 million, a steep decline from the appraised value of $640.0 million at issuance, reflecting LTV ratios on the senior loan and whole loan amounts of 70.4% and 188.2%, respectively, not including the servicer advances to date. Re-leasing 81 Prospect Street will likely be difficult and costly, with the appraiser estimating tenant improvements at $75.00 psf, with one year of free rent. Given the borrower’s inability to secure refinancing, paired with the soft market conditions, which will challenge the borrower’s ability to backfill or require a significant equity contribution, Morningstar DBRS assumed a conservative liquidation scenario based on a stress applied to the November 2023 appraised value, resulting in a projected loss severity for the trust debt approaching 10%.”

The property

The parcel has frontage of 99 feet and is 118 feet deep with a total lot size of 8,253 square feet. The lot is irregular. The zoning is M1-6 which allows for up to 10 times floor area ratio (FAR) for manufacturing. The city-designated market value for the property in 2022 is $19.4 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. 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 August 3, 2015. There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The neighborhood

In Downtown Brooklyn, The bulk, or 40 percent of the 22.4 million square feet of commercial built space are office buildings, with elevator buildings next occupying 24 percent of the space. In sales, Downtown Brooklyn has 3.3 times the average sales volume among other neighborhoods with $900.9 million in sales volume in the last two years and is the 3rd highest in Brooklyn. For development, Downtown Brooklyn has 3.4 times the average amount of major developments relative to other neighborhoods and is the 3rd highest in Brooklyn. It had 3.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 16 percent of the neighborhood’s built space.

The block

There are no active new building construction projects on this tax block.

The majority, or 100 percent of the 118,607 square feet of built space are office buildings, with specialty buildings next occupying 0 percent of the space.

Direct link to Acris document. link