Joel Schwartz signs $26M construction loan with S3 Capital for 48-unit project in Williamsburg

Joel Schwartz through the entity North 1st Apartments LLC as borrower signed a new construction loan with lender S3 Capital through the entity S3 Re 88 North 1st Funding LLC valued at $26 million for the office building (O2) at 88 North 1st Street in Williamsburg, Brooklyn.
On the lot, there is one active new building construction project for a 48-unit, 32,835 square-foot R-2 building. The project was submitted by Hershy Silberstein of Bluesky Builders with plans filed March 14, 2022 and it has not been permitted yet.
Joel Schwartz and Hershy Silberstein are working together on another project on this block, a 50-unit development at 228 Berry Street.
The deal closed on May 25, 2023 and was recorded on June 8, 2023. The prior lender was S3 Capital which held debt that had an original loan amount of $8.5 million.

The owner bought the property on April 7, 2022, for $11 million. The signatory for Joel Schwartz was Joel Schwartz. The signatory for S3 Capital was Joshua Crane.

Prior sales and revenue

The 10,500-square-foot property generated revenue of $219,240 or $21 per square foot, according to the most recent income and expense figures.

The property

The parcel has frontage of 75 feet and is 131 feet deep with a total lot size of 9,174 square feet. The lot is irregular. The zoning is M1-2/R6A which allows for up to 2 times floor area ratio (FAR) for manufacturing and up to 3 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $1 million. The most recent loan totaled $8.5 million and was provided by S3 Capital on April 7, 2022.

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 received $1,280 in ECB penalties and $2,780 in OATH penalties in the last year.

The neighborhood

In Williamsburg, The bulk, or 39 percent of the 50.4 million square feet of commercial built space are elevator buildings, with walkup buildings next occupying 25 percent of the space. In sales, Williamsburg has the 6th highest sale turnover among other neighborhoods in the city with $2.4 billion in sales volume in the last two years. For development, Williamsburg is the 9th most active neighborhood among other neighborhoods. It had 4.2 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 was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of six of the 17 commercial properties representing 28,800 square feet of the 83,716 square feet. The largest owner is Joel Schwartz, followed by Jeremy Armstrong and then Edery Global.
On the tax block, there were five new building construction projects totaling 164,688 square feet. The largest is a 38-unit, 48,615 square-foot residential (R-2) building submitted by DDG Partners and filed by Joseph McMillan with plans filed November 2, 2018 and permitted April 19, 2022. The second largest is a 50-unit, 35,329 square-foot residential (R-2) building submitted by Hershy Silberstein and filed by Hershy Silberstein with plans filed October 28, 2021 and permitted May 11, 2022.

The majority, or 48 percent of the 83,716 square feet of built space are mixed-use buildings, with industrial buildings next occupying 31 percent of the space.

The borrower

The PincusCo database currently indicates that Joel Schwartz owned at least 76 commercial properties with 938 residential units in New York City with 1,001,267 square feet and a city-determined market value of $171 million. (Market value is typically about 50% of actual value.) The portfolio has $820.9 million in debt, with top three lenders as BridgeCity Capital, Citibank, and Starwood Capital Group respectively. Within the portfolio, the bulk, or 56 percent of the 1,001,267 square feet of built space are elevator properties, with walkup properties next occupying 17 percent of the space. They are all located in Brooklyn.

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