Jenel Management signs $192.1M refi with H.I.G. Capital for new construction in Downtown Brooklyn

Jenel Management through the entity 540 Fulton Owner LLC as borrower signed a refinanced construction loan with lender H.I.G. Capital through the entity H.I.G. Realty Financing I, LLC valued at $192.1 million for the midblock 327-unit residential elevator building at 540 Fulton Street in Downtown Brooklyn, Brooklyn.
The deal closed on February 4, 2022 and was recorded on March 21, 2022. The prior lender was Otera Capital which held debt that had an original loan amount of $155 million. The property has 333,461 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $576 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 Jenel Management was David Dushey. The signatory for H.I.G. Capital was Jeffrey Wiseman. Multi Housing News reports that this funding is for the Paxton, a 43-story development nearing completion.

The property

The 540 Fulton Street parcel has frontage of 110 feet and is 136 feet deep with a total lot size of 15,015 square feet. The zoning is C6-4 which allows for up to 10 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $47.4 million.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has received $24,370 in ECB penalties and $24,370 in OATH penalties in the last year.

Development

On these lots, there is one active new building construction project for a 327-unit, 333,041-square-foot B building. The project was developed by Samuel Dushey with plans filed April 20, 2016 and permitted January 22, 2019.

The neighborhood

In Downtown Brooklyn, the bulk, or 36 percent of the 26.8 million square feet of commercial built space are office buildings, with residential elevator buildings next occupying 29 percent of the space. In sales, Downtown Brooklyn has 1.3 times the average sales volume among other neighborhoods with $365.7 million in sales volume in the last two years and is the 10th highest in Brooklyn. For development, Downtown Brooklyn has 2.9 times the average amount of major developments relative to other neighborhoods and is the 7th highest in Brooklyn. It had 2.6 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 11 of the 25 commercial properties representing 365,042 square feet of the 911,868 square feet. The largest owner is Lonicera, followed by Saied Shamash and then Adam America Real Estate. There are six active new building construction projects totaling 922,975 square feet. The largest is a 327-unit, 333,041-square-foot B building developed by Samuel Dushey with plans filed April 20, 2016 and permitted January 22, 2019. The second largest is a 314-unit, 299,406-square-foot R-2 building developed by John Evans with plans filed September 21, 2021 and it has not been permitted yet.

the majority, or 57 percent of the 582,822 square feet of built space are residential elevator buildings, with mixed-use buildings next occupying 16 percent of the space.

The borrower

The PincusCo database currently indicates that Jenel Management owned at least 10 commercial properties with 227,730 square feet and a city-determined market value of $80.7 million. (Market value is typically about 50% of actual value.) The portfolio has $183.5 million in debt, with top three lenders as Signature Bank, Santander Bank, and New York Community Bank respectively. Within the portfolio, the bulk, or 65 percent of the 227,730 square feet of built space are retail properties, with mixed-use properties next occupying 35 percent of the space. The bulk, or 57 percent of the built space, is in Queens, with Bronx next at 27 percent of the space.

Surrounding

Within a 400-foot radius of 540 Fulton Street, Pincusco identified eight commercial real estate items of interests occurred over the past 24 months.
Of those eight items, two were in new building development. There were two new building permit applications. The most recent of these two items was a filing on September 21, 2021 for a 244,085-square-foot R-2 building with 314 residential units at 15 Hanover Place.
Of those eight items, five were sales above $5 million totaling $77.1 million. The most recent of the five was Saied Shamash which bought the 5,126-square-foot, three-unit mixed-use building (S2) on 295 Livingston Street for $5 million from Amrik S. Hira on January 4, 2022.
One of those eight items was a loan which Adam America Real Estate borrowed $30 million from Bank Leumi secured by 82 condo units in the N/A-square-foot, 371-unit mixed-use building (RM) on 10 Nevins Street on September 11, 2020.

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