Madison Realty Capital acquires bankrupt 41-unit rental in Brighton Beach, $24M transfer value

Madison Realty Capital through the entity 3052 Brighton St Owner LLC acquired the bankrupt 41-unit residential elevator building (D7) at 3052 Brighton 1st Street in Brighton Beach, Brooklyn, once owned by Chaim Miller and Sam Sprei. The transfer value was $24 million.
The deal closed on January 12, 2024 and was recorded on February 9, 2024. The property has 72,715 square feet of built space according to a PincusCo analysis of city data. The transfer price per built square foot is $330 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 contract date was January 12, 2024.

This is a sale through a bankruptcy, the prior owners were Chaim Miller and Sam Sprei who borrowed $17 million from Signature Bank in 2015. Madison Realty Capital bought that debt several months later, in June 2015, and lent the owners another $9 million. At the time, Miller and Sprei were under financial pressure related to a Southern District bankruptcy case, 15-10368.
In 2020, the property by Jonathan Rubin as president of the owner entity, was placed into bankruptcy in the Southern District. 20-40794-nhl, following a pre-foreclosure suit Madison Realty Capital filed in 2015, 509304/2015. Miller and Sprei early on lost the foreclosure case in state court, but they appealed to the state Appellate Division, which on January 18, 2022, rejected the appeal.

The bankruptcy marketing process was led by Greg Corbin of Northgate Real Estate Group, who began the process when he was at Rosewood Realty Group.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Madison Realty Capital purchased 10 properties in five transactions for a total of $212.3 million and sold 11 properties in eight transactions for a total of $81.6 million over the past 24 months.

The property

The residential elevator building with 41 residential units in Brighton Beach has 72,715 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 180 feet and is 100 feet deep with a total lot size of 17,999 square feet. The zoning is R6 which allows for up to 2.43 times floor area ratio (FAR) for residential. The property has a 421A exemption that started in 2011 and expires in 2026. The city-designated market value for the property in 2022 is $7.5 million.

Development

For the tax lot building, it received its initial certificate of occupancy on September 4, 2013. There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The block

On this tax block, PincusCo has identified the owners of one of the 15 commercial properties representing 34,000 square feet of the 191,891 square feet. The identified owner is Isaac Katz.
On the tax block, there was one new building construction project filed totaling 2,000 square feet. It is a two-unit, 2,000 square-foot residential (R-3) building submitted by Alia Ijaz with plans filed June 8, 2016 and it has not been permitted yet.

The majority, or 38 percent of the 191,891 square feet of built space are elevator buildings, with office buildings next occupying 22 percent of the space.

The buyer

The PincusCo database currently indicates that Madison Realty Capital owned at least 63 commercial properties with 2,654 residential units in New York City with 2,793,310 square feet and a city-determined market value of $381 million. (Market value is typically about 50% of actual value.) The portfolio has $1.4 billion in debt, with top three lenders as Signature Bank, MF1 Capital, and Elliott Investment Management respectively. Within the portfolio, the bulk, or 75 percent of the 2,793,310 square feet of built space are elevator properties, with walkup properties next occupying 13 percent of the space. The bulk, or 38 percent of the built space, is in Queens, with Brooklyn next at 32 percent of the space.

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