Ohana acquires hotel, rental from Cornell Realty in Downtown Brooklyn bankruptcy with $94M credit bid

The hospitality investment firm Ohana Real Estate Investors through the entity TH Holdings Propco LLC acquired the hotel and the 64-unit rental building at 85 Flatbush Avenue Extension in Downtown Brooklyn, Brooklyn. Ohana took ownership as the former debt holder through the bankruptcy filing Isaac Hager’s Cornell Realty Management filed on the property. The transaction price was a credit bid. Cornell Realty Management owned the property through entities including 85 Flatbush Rho Hotel LLC. The property is owned as a three-unit commercial condominium composed of a hotel, rental apartment and commercial unit.
The deal closed on November 9, 2022 and was recorded on December 14, 2022. The three properties have 150,688 square feet of built space according to PincusCo analysis of city data. The transfer price per built square foot is $623 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 Cornell Realty Management bankrupt was David Goldwasser, a bankruptcy professional. The signatory for Ohana Real Estate Investors was partner James Cole.
According to the bankruptcy filing, the $94 million represents the $90 million credit bid plus $4 million in additional consideration. The bankruptcy plan says, “TH Holdco Initial Credit Bid means the initial TH Holdco Credit Bid for all of the assets subject to the lien held by TH Holdco in the aggregate amount of $90,000,000 plus the TH Holdco Additional Consideration of approximately $4 million, to be allocated among such encumbered assets as announced by TH Holdco at or prior to the Auction or such higher and better bid as TH Holdco may thereafter submit… TH Holdco Additional Consideration shall mean Cash to be funded by TH Holdco to pay Allowed Cure Obligations, Allowed Administrative Expenses (including Professional Fees and United States Trustee Fees) and Allowed Priority Claims which shall be part of and paid from the Plan Fund.” Ohana Real Estate bought the debt in January 2022.

As part of Ohana’s purchase, it obtained a $55 million loan from Madison Realty Capital, which had been the prior lender when Cornell bought the site, providing $70 million for approximately $95 million in 2019. 

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the rental property with an address of 60 Duffield Street.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Ohana Real Estate Investors had purchased any other properties and has no record it sold any properties over the past 24 months.
Cornell Realty Management recently turned over ownership to Madison Realty Capital of a Williamsburg development site with $27.5 million in loans.

The property

The 60 Duffield Street parcel has a total lot size of 60,129 square feet. The property has a 421A exemption that started in 2012 and expires in 2027. The city-designated market value for the property in 2022 is $18.8 million.The most recent loan totaled $70 million and was provided by Madison Realty Capital on September 19, 2019.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The block

On the tax block of 60 Duffield Street, PincusCo has identified the owners of four of the eight commercial properties representing 226,888 square feet of the 226,888 square feet. The largest owner is Rubin Equities, followed by City of New York and then Rubin Equities Inc..
On the tax block, there was one new building construction project filed totaling 29,646 square feet. It is a 70-unit, 29,646-square-foot R-1 building developed by Jack Suratwala with plans filed July 12, 2017 and it has not been permitted yet.

The majority, or 100 percent of the 160,000 square feet of built space are specialty buildings, with development buildings next occupying 0 percent of the space.

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