Lender North Hill Capital Management through the entity Smith Street REO, LLC acquired title of the long-troubled vacant development site at 232 Smith Street in Carroll Gardens, Brooklyn. The total judgment was $30.8 million and the auction price was $2.6 million, leaving a deficiency of $28.2 million, according to the court filings. The former owner and borrower was an affiliate of developer Louis V. Greco Jr.
The deal closed on March 16, 2023 and was recorded on July 27, 2023. The property has zero square feet of built space and 9,998 square feet of additional air rights for a total buildable of 9,998 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $N/A and the price per buildable square foot is $260 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 seller bought the property on June 12, 2015, for $1.6 million. The signatory for the court was Michael D. Benjamin. The signatory for North Hill Capital Management was Alfonso Kimche. The contract date was January 12, 2023.
The original borrower was Louis V. Greco Jr. of Second Development Services, who took out a land and construction loan totaling approximately $12 million from North Hill Capital Management. North Hill in 2020 brought a pre-foreclosure action, which resulted in the auction and acquisition by North Hill. 516709/2020 In September 2022, the borrower entity filed a bankruptcy action,
1-22-42120-ess which was closed in April 2023.
The plaintiff made a series of allegations in court filings, laying out the reasons for the foreclosure. Court filings represent the position of one party and are not necessarily accurate or complete.
According to documents from the foreclosure proceedings, “For years, the Mortgaged Premises has been vacant while the Borrower and various insurance companies litigate over damages and liability arising from negligent construction work that not only damaged the Mortgaged Premises but also led to the condemnation of an adjacent property.
“Compounding matters is that the Mortgaged Premises is nothing more than a partially demolished hole in the ground where development has been made impossible for years as a result of Borrower’s and its affiliated entities having constructed the Mortgaged Premises in such a dangerous and unsafe manner that the Department of Buildings (“DOB”) intervened and issued multiple Stop Work Orders, including a tear down order for the adjacent property…
“On September 1, 2022, a Judgment of Foreclosure and Sale (the “Foreclosure Judgment”) was entered in the Foreclosure Action, pursuant to which this Court found that the Borrower owed Lender $25,810,995.69 as of January 31, 2022, plus additional interest, costs, and fees that accrued thereafter (the “Foreclosure Judgment Balance”).”
According to the notice of sale, “After making payments of all sums due, there remains a deficiency in the amount of twenty eight million one hundred seventy two thousand one hundred eighty five dollars and six cents ($28,172,185.06), comprising thirty million seven hundred seventy two thousand one hundred eighty five dollars and six cents ($30,772,185.06) in total amount due minus the two million six hundred thousand dollar ($2,600,000.00) auction price at the foreclosure sale.”
Prior sales and revenue
Prior to this transaction, PincusCo has no record that the buyer North Hill Capital Management had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Louis V. Greco Jr. foreclosed had not purchased any other properties and had not sold any properties over the same time period.
The parcel has frontage of 50 feet and is 100 feet deep with a total lot size of 4,999 square feet. The zoning is R6B which allows for up to 2 times floor area ratio (FAR) for residential with inclusionary housing. The city-designated market value for the property in 2022 is $557,000.
Violations and lawsuits
The property was involved one bankruptcy over the past two years. The bankruptcy was filed on September 7, 2022, by Elliott Hefler citing assets of $25.8 million. In addition, according to city public data, the property has received $330 in OATH penalties in the last year.
On the lot, there is one active new building construction project for a 10,000 square-foot M building. The project was submitted by Louis Greco with plans filed July 1, 2015 and permitted June 26, 2018.
In Carroll Gardens, The bulk, or 44 percent of the 3.6 million square feet of commercial built space are walkup buildings, with mixed-use buildings next occupying 33 percent of the space. In sales, Carroll Gardens has near average sales volume among other neighborhoods with $345.8 million in sales volume in the last two years and is the 24th highest in Brooklyn. For development, Carroll Gardens has had very little major development activity relative to other neighborhoods.It had 138,013 square feet of commercial and multi-family construction under development in the last two years, which represents 4 percent of the neighborhood’s built space.
On the tax block, there was one new building construction project filed totaling 10,000 square feet. It is a 10,000 square-foot mercantile (M) building submitted by Louis Greco with plans filed July 1, 2015 and permitted June 26, 2018.
The majority, or 56 percent of the 31,572 square feet of built space are mixed-use buildings, with specialty buildings next occupying 34 percent of the space.
Direct link to Acris document. link