Madison Realty acquires two Fortis dev sites valued at $145M, Madison’s 3rd borrower turnover in month

Madison Realty Capital acquired two Cobble Hill development sites, 95 Pacific Street and 350 Hicks Street, valued at $145 million from Fortis Property Group. The sites were facing a UCC foreclosure, The Real Deal reported.
Fortis is the third Madison Realty Capital borrower to see its property transferred to former lender Madison Realty Capital in the past month. The other two were Isaac Hager of Cornell Realty Management, who lost a Williamsburg development site with a $27.5 million loan to Madison, and Bo Jin Zhu, who lost a Greenpoint development site to Madison, that had a $28 million loan.

The financing on the transfer of the Fortis sites to Madison was opaque in city records. Madison assigned a $76.9 million land loan to Apollo Global Management and related affiliates. At the same time, Apollo assigned construction debt totaling $78.7 million and $72.5 million to the entity FTLP LLC, which had an address at a law firm and the signatory was an accountant.

As for the two transactions, in the larger Madison Realty Capital through the entity Pacific Hicks Owner 2 LLC acquired at a valuation of $92.1 million from Fortis Property Group through the entity Fpg Ch 91 Pacific, LLC the development parcel at 91-95 Pacific Street in Cobble Hill, Brooklyn.

In the second transfer,  Madison Realty Capital through the entity Pacific Hicks Owner 1 LLC acquired at a valuation of $53 million from Fortis Property Group through the entity Fpg Ch 350 Hicks, LLC, the property at 350 Hicks Street in Cobble Hill, Brooklyn. The deal closed on October 20, 2022 and was recorded on November 18, 2022. The seller bought the property on September 1, 2015, for $17.2 million.
The deal closed on October 20, 2022 and was recorded on November 18, 2022.
The seller bought the property on September 1, 2015, for $12 million. The signatory for Fortis Property Group was Joel Kestenbaum. The signatory for Madison Realty Capital was Joshua Zegen. The Real Deal first reported in September 2022 that Madison Realty Capital was offering a mezzanine position for sale led by Greg Corbin, president of bankruptcy and restructuring at the brokerage Rosewood Realty Group. In October, The Real Deal reported the transfer, but without noting a transfer price or the debt.

The contract date and sale date were both October 20, 2022. These two development parcels were part of a three-parcel development complex that also included 347 Henry Street. Fortis remains owner of that condominium project. PincusCo condo data shows that 21 of the 25 residential units sold for a total of $77 million out of a total sellout of $82.9 million.

In 2017, Madison Realty Capital gave a $30 million mezzanine loan to Fortis Property Group.  In addition to the sale, Madison Realty gave to Fortis an option for Fortis to buy unused air rights, but the amount of air rights, the price or any other information was not disclosed.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Madison Realty Capital purchased 22 properties in 18 transactions for a total of $194.6 million and sold eight properties in six transactions for a total of $86.2 million over the past 24 months.
The seller Fortis Property Group had not purchased any other properties and had not sold any properties over the same time period.

Development

On the lot, there are two active new building construction projects and major alteration projects with initial costs more than $5 million, totaling 911,696 square feet. The largest is a new building project for a 102-unit, 567,748 square-foot R-2 building developed by Akiva Kobre with plans filed December 22, 2016 and it has not been permitted yet. The second largest is a new building project for a 343,948 square-foot B building developed by Beau Everett with plans filed July 31, 2015 and permitted July 14, 2022. On the tax lot, the most recent condominium plan was filed by FPG CH 91 PACIFIC, LLC to create 103 residential units in a building at 91 Pacific Street in Cobble Hill, Brooklyn, called 2 River Park Condominium that has a $241.4 million sellout, according to an January 23, 2018 submission to the New York State Attorney General.

The neighborhood

In Cobble Hill, the bulk, or 38 percent of the 1.6 million square feet of commercial built space are walkup buildings, with specialty buildings next occupying 37 percent of the space. In sales, Cobble Hill has had very little sales volume relative to other neighborhoods with $103.4 million in sales volume in the last two years. For development, Cobble Hill has had very little major development activity relative to other neighborhoods.It had 351,698 square feet of commercial and multi-family construction under development in the last two years, which represents 22 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the eight commercial properties representing 24,496 square feet of the 76,687 square feet. The two identified owners are Highpoint Property Group and NYU Langone Hospitals.
On the tax block, there were two new building construction projects totaling 911,696 square feet. The largest is a 102-unit, 567,748-square-foot R-2 building developed by Akiva Kobre with plans filed December 22, 2016 and permitted November 9, 2017. The second largest is a 343,948-square-foot B building developed by Beau Everett with plans filed July 31, 2015 and permitted April 24, 2019.

The buyer

The PincusCo database currently indicates that Madison Realty Capital owned at least 65 commercial properties in New York City with 2,247,082 square feet and a city-determined market value of $386.4 million. (Market value is typically about 50% of actual value.) The portfolio has $686 million in debt, with top three lenders as Signature Bank, Athene Annuity And Life Company, and Citibank respectively. Within the portfolio, the bulk, or 58 percent of the 2,247,082 square feet of built space are elevator properties, with walkup properties next occupying 16 percent of the space. The bulk, or 37 percent of the built space, is in Manhattan, with Brooklyn next at 30 percent of the space.

Direct link to Acris document. link