KKR, Dalan pay $235.4M to Jenel for 327-unit rental in Downtown Brooklyn

KKR & Co. and Dalan Real Estate through the entity Kre 540 Fulton Owner LLC paid $235.4 million to Jenel Real Estate through the entity 540 Fulton Owner LLC for the 327-unit rental at 540 Fulton Street in Downtown Brooklyn, Brooklyn. The expected use is cash flowing.
The deal closed on October 15, 2024 and was recorded on October 22, 2024.

The buyers financed the purchase with a $145 million loan from Sumitomo Mitsui Banking Corporation.
The signatory for Jenel Real Estate was David Dushey. The signatory for KKR & Co. and Dalan Real Estate was Daniel Rudin. The contract date was July 19, 2024. A partnership led by Jack Dushey bought the building from the Klein and Fruchthandler families on April 15, 1981, for $271,500, during the recession of 1981-1982, which at the time was the worst economic downturn since the Great Depression.  The prime rate, which is now about 8 percent, was 17 percent in April 1981.
In April 2023, Jenel Management converted the building into three commercial condominium units, with the building named The Paxton, composed of a residential block with 327 units that is being sold, and 201,560 square feet or 67 percent of the total non-common space. The office portion, lot 1202 has 77,850 square feet on floors two to eight, and the retail with 20,134 in the lower level and ground floor, lot 1203. The retail and office were not sold. Globe Street reported on the transaction in November 2023, citing Green Street.
Five days before this closed, KKR and Dalan sold 80 Dekalb Avenue to Atlas Capital Group for $202.5 million.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer KKR & Co. had purchased any other properties and sold one property in one transaction for a total of $202.5 million over the past 24 months.

The block

On this tax block, PincusCo has identified the owners of seven of the 16 commercial properties representing 518,988 square feet of the 619,724 square feet. The largest owner is Jenel Management, followed by Midas Hospitality and then Jj Operating.
On the tax block, there were five new building construction projects totaling 829,921 square feet. The largest is a 327-unit, 333,041 square-foot business (B) building submitted by Jenel Real Estate and filed by Samuel Dushey with plans filed April 20, 2016 and permitted December 14, 2017. The second largest is a 314-unit, 244,085 square-foot residential (R-2) building submitted by Lonicera Partners and filed by John Evans with plans filed September 21, 2021 and permitted December 26, 2022.

The majority, or 60 percent of the 619,724 square feet of built space are elevator buildings, with mixed-use buildings next occupying 12 percent of the space.

Correction: an earlier version of this post used the name Dalan Management. The correct name is Dalan Real Estate.

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