Lam Group signs $85M refi for hotel in Downtown Brooklyn, gets $22.5M gap loan

Lam Group through the entity Dumbo Hotel LLC as borrower signed a refi loan with lender Deutsche Bank through the entity DBR Investments Co. Limited valued at $85 million for the Sheraton Brooklyn New York hotel building (H1) at 222-228 Duffield Street in Downtown Brooklyn, Brooklyn.
The deal closed on January 31, 2024 and was recorded on February 16, 2024. The prior lender was H.I.G. Capital which held debt that had an original loan amount of $68 million.
The property has 173,000 square feet of built space according to a PincusCo analysis of city data. The loan price per built square foot is $491 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 Lam Group was Kin Chung Lam, who also uses the name John Lam. The signatory for Deutsche Bank was Daniel Penn and Matt Smith. The financing includes a $22.5 million gap loan.

Prior sales and revenue

The owners according to the Department of Housing Preservation and Development includes Kin Chung Lam, head officer and Ray Mannon, site manager. The business entity is Dumbo Hotel Llc.

The property

The hotel building in Downtown Brooklyn has 173,000 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 89 feet and is 100 feet deep with a total lot size of 9,004 square feet. The zoning is C6-4.5 which allows for up to 12 times floor area ratio (FAR) for commercial. The city-designated market value for the property in 2022 is $38.8 million. The most recent loan totaled $108.4 million and was provided by H.I.G. Capital on January 26, 2024.

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 one DOB violation and $6,930 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 $1 million on this tax lot.

The neighborhood

In Downtown Brooklyn, The bulk, or 40 percent of the 22.4 million square feet of commercial built space are office buildings, with elevator buildings next occupying 24 percent of the space. In sales, Downtown Brooklyn has 4 times the average sales volume among other neighborhoods with $1.2 billion in sales volume in the last two years and is the 2nd highest in Brooklyn. For development, Downtown Brooklyn has 2.6 times the average amount of major developments relative to other neighborhoods and is the 4th highest in Brooklyn. It had 2.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 11 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of six of the six commercial properties representing 316,627 square feet of the 316,627 square feet. The largest owner is United American Land, followed by Thor Equities and then Solil Management.
There are no active new building construction projects on this tax block.

The majority, or 84 percent of the 316,627 square feet of built space are hotel buildings, with office buildings next occupying 11 percent of the space.

The borrower

The PincusCo database currently indicates that Lam Group owned at least eight commercial properties with 192 residential units in New York City with 1,432,846 square feet and a city-determined market value of $400.3 million. (Market value is typically about 50% of actual value.) The portfolio has $374.1 million in debt, with top three lenders as Shanghai Commercial Bank, H.I.G. Capital, and Investors Bank respectively. Within the portfolio, the bulk, or 70 percent of the 1,432,846 square feet of built space are hotel properties, with elevator properties next occupying 28 percent of the space. The bulk, or 81 percent of the built space, is in Manhattan, with Brooklyn next at 19 percent of the space.

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