Joseph Zafarani signs $13M refi loan with First Technology for office in Midwood

Joseph Zafarani through the entity 1301 Ave J LLC as borrower signed a refi loan with lender First Technology Federal Credit Union valued at $13 million for the office building at 1301 Avenue J in Midwood, Brooklyn.
The deal closed on March 30, 2022 and was recorded on May 10, 2022. The prior lender was Inland Real Estate which held debt that had an original loan amount of $12.4 million. The property has 33,753 square feet of built space and 38,160 square feet of additional air rights for a total buildable of 72,000 square feet according to PincusCo analysis of city data. The loan price per built square foot is $385 and the price per buildable square foot is $180 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 owner bought the property on January 30, 2017, for $8.2 million. The signatory for Joseph Zafarani was Joseph Zafarani. The signatory for First Technology Federal Credit Union was Debra Richard.

The property

The 1301 Avenue J parcel has frontage of 100 feet and is 180 feet deep with a total lot size of 18,000 square feet. The zoning is C4-4A which allows for up to 4 times floor area ratio (FAR) for commercial and up to 4 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $6.4 million. The most recent loan totaled $12.7 million and was provided by Northeast Bank on December 30, 2020.

Violations and lawsuits

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $12.6 million judgment concerning a loan filed on August 31, 2021, by Joseph Zafarani against Inland Real Estate Group. In addition, according to city public data, the property has received four DOB violations and $560 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Midwood, the bulk, or 44 percent of the 44.6 million square feet of commercial built space are 1-4 family buildings, with residential elevator buildings next occupying 34 percent of the space. In sales, Midwood has had very little sales volume relative to other neighborhoods with $141.4 million in sales volume in the last two years. For development, Midwood has had very little major development activity relative to other neighborhoods.It had 335,909 square feet of commercial and multi-family construction under development in the last two years, which represents 0.75 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of two of the 14 commercial properties representing 126,831 square feet of the 225,781 square feet. The two identified owners are Joseph Zafarani and BRG Management. There is one active new building construction project totaling 3,840 square feet. It is a one-unit, 3,840-square-foot B building developed by Menachem Churba with plans filed February 21, 2017 and it has not been permitted yet.

The majority, or 43 percent of the 332,183 square feet of built space are residential elevator buildings, with specialty buildings next occupying 15 percent of the space.

The borrower

The PincusCo database currently indicates that Joseph Zafarani owned at least three commercial properties with 70,389 square feet and a city-determined market value of $17.3 million. (Market value is typically about 50% of actual value.) The portfolio has $51.7 million in debt, borrowed from RGA Reinsurance Company and Northeast Bank. Within the portfolio, the bulk, or 48 percent of the 70,389 square feet of built space are office properties, with mixed-use properties next occupying 29 percent of the space. The bulk, or 77 percent of the built space, is in Brooklyn, with Bronx next at 23 percent of the space.

Surrounding

Within a 400-foot radius of 1301 Avenue J, PincusCo identified three commercial real estate items of interests occurred over the past 24 months.
One of those three items was a sale which 1121 Avenue J Owner LLC bought the 4,746-square-foot, two-unit mixed-use building (K4) on 1123 Avenue J for $10.6 million from Wharton Properties on May 7, 2021.
Of those three items, two were loans above $5 million totaling $17.8 million. The most recent of the two was BRG Management which borrowed $10.4 million from New York Community Bank secured by the 93,078-square-foot, 88-unit rental (D1) on 950 East 14th Street on April 5, 2022.

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