Joel Schwartz signs $24.8M refi with Quanta Finance in Brooklyn

Joel Schwartz through the entity 319 Lenox USA LLC as borrower signed a refi loan with lender Quanta Finance valued at $24.8 million for three properties including the midblock 10-unit residential elevator building at 390 Leonard Street in Williamsburg, Brooklyn, midblock development building at 438 Union Avenue in Williamsburg, Brooklyn, and midblock development building at 319 Lenox Road in East Flatbush, Brooklyn.
The deal closed on May 25, 2022 and was recorded on June 17, 2022. The prior lender was Quanta Finance. The three properties have 7,082 square feet of built space and 31,356 square feet of additional air rights for a total buildable of 37,431 square feet according to PincusCo analysis of city data. The loan price per built square foot is $3,494 and the price per buildable square foot is $661 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 Joel Schwartz was Joel Schwartz. The signatory for Quanta Finance was Matthew Zafrin. This is a cross-collateralization agreement.

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 390 Leonard Street.

Prior sales and revenue

Out of the three properties, one with a total of 7,082 square feet of built space generated revenue of $359,773 per year.

The property

The 390 Leonard Street parcel has frontage of 25 feet and is 100 feet deep with a total lot size of 2,500 square feet. The zoning is M1-2/R6 which allows for up to 2 times floor area ratio (FAR) for manufacturing and up to 2.43 times FAR for residential. The city-designated market value for the property in 2022 is $365,000.

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 one DOB violation, $114,900 in ECB penalties, and $120,300 in OATH penalties in the last year.

Development

On these lots, there are four active new building construction projects and major alteration projects with initial costs more than $5 million, totaling 43,134 square feet. The largest is a new building project for a 28-unit, 20,559-square-foot R-2 building developed by Jack Lipman with plans filed March 30, 2018 and it has not been permitted yet. The second largest is a new building project for a 13-unit, 9,226-square-foot R-2 building developed by Joel Schwartz with plans filed September 25, 2018 and permitted November 17, 2021.

The neighborhood

In Williamsburg, the bulk, or 35 percent of the 65.1 million square feet of commercial built space are residential elevator buildings, with residential walkup buildings next occupying 19 percent of the space. In sales, Williamsburg has the 9th highest sale turnover among other neighborhoods in the city with $1.4 billion in sales volume in the last two years. For development, Williamsburg is the 6th most active neighborhood among other neighborhoods. It had 5.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 8 percent of the neighborhood’s built space. There were three pre-foreclosure suit filed among other residential elevator buildings in the past 12 months.

The block

There are two active new building construction projects totaling 13,349 square feet. The largest is a nine-unit, 6,746-square-foot R-2 building developed by Julia Zolotova with plans filed July 8, 2015 and it has not been permitted yet.The second largest is a 10-unit, 6,603-square-foot R-2 building developed by Joel Schwartz with plans filed April 1, 2019 and permitted August 4, 2020.

The majority, or 26 percent of the 27,058 square feet of built space are residential elevator buildings, with mixed-use buildings next occupying 25 percent of the space.

The borrower

The PincusCo database currently indicates that Joel Schwartz owned at least 84 commercial properties with 926,159 square feet and a city-determined market value of $146.4 million. (Market value is typically about 50% of actual value.) The portfolio has $653.2 million in debt, with top three lenders as Citibank, Starwood Capital Group, and BridgeCity Capital respectively. Within the portfolio, the bulk, or 50 percent of the 926,159 square feet of built space are elevator properties, with walkup properties next occupying 25 percent of the space. The bulk, or 98 percent of the built space, is in Brooklyn, with Queens next at 2 percent of the space.

Surrounding

Within a 400-foot radius of 390 Leonard Street, PincusCo identified nine commercial real estate items of interests occurred over the past 24 months.
Of those nine items, three were in new building development. There were two new building permit applications and one new building permit. The most recent of these three items was a filing on May 25, 2022 for a 13,499-square-foot R-2 building with 20 residential units at 104 Frost Street.
Of those nine items, two were for major renovation including a certificate of occupancy change. They were one permit applications with a total initial cost of $600,000 and one permit with a total initial cost of $1.4 million. The most recent of these two items was the permit on October 20, 2020 for a 7,919-square-foot R-2 building with 10 residential units at 391 Meeker Avenue.
One of those nine items was a sale which Michael Lipman bought the 8,138-square-foot, 10-unit rental (C7) on 415 Manhattan Avenue for $5.9 million from Joel Schwartz on March 11, 2022.
Of those nine items, three were loans above $5 million totaling $21.8 million. The most recent of the three was Michael Lipman which borrowed $6.9 million from BridgeCity Capital secured by the 8,138-square-foot, 10-unit rental (C7) on 415 Manhattan Avenue on March 11, 2022.

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