Safehold pays $59.5M for fee under Delshah Capital’s 180-unit rental in Downtown Brooklyn

Safehold paid $59.5 million for the fee under Delshah Capital’s 180-unit rental building at 22 Chapel Street in Downtown Brooklyn in two separate transactions, and was part of a larger transaction that was reported to value the property at $147.5 million.

In the first transaction, Safehold Inc. through the entity 22 Chapel Street Ground Owner LLC paid $48.8 million to Start Treatment & Recovery Centers, Inc. for an 82 percent stake in the fee under the 180-unit residential elevator building (D6) at 22 Chapel Street in Downtown Brooklyn, Brooklyn.
In the second transaction, Safehold Inc. through the entity 22 Chapel Street Ground Owner LLC paid $10.7 million to Delshah Capital and OTL Enterprises through the entity Delshah/Otl 22 LLC for a nearly 18 percent stake in the fee under the 180-unit residential elevator building (D6) at 22 Chapel Street in Downtown Brooklyn, Brooklyn.
The deal closed on August 31, 2022 and was recorded on October 19, 2022. The property has 164,559 square feet of built space and 548 square feet of additional air rights for a total buildable of 165,152 square feet according to PincusCo analysis of city data.
The seller bought the property on December 31, 2018, for $26.4 million. The signatory for Start Treatment & Recovery Centers, Inc. was Jean Stennett. The signatory for Safehold Inc. was Sander Ash.

In this transaction, Safehold bought the fee under Delshah Capital and OTL Enterprises 180-unit project for $59.5 million from Start for just over 82 percent and from Delshah, OTL for just under 18 percent. At the same time, Start sold it’s 82.06% interest in the 105-year leasehold to Delshah Capital and partners for $61.1 million and Delshah and OTL sold the 17.94 percent to Delshah and investors for $13.4 million. That puts the entire transaction at $134 million in Acris records. Delshah and investors will control the building through a ground lease as tenants, with Safehold as the fee owner and landlord. Jean Stennett is on the board of Start. At the same time, Arbor Realty Trust refinanced a prior Bank OZK $62 million loan that had covered the entire building to a $61 million loan covering only the Delshah leasehold position. No debt has been recorded against the new Safehold ground lessor position. The Real Deal first reported the transactions but without the price Safehold paid, in an article in September 2022 that put the total value of the property at $147.5 million. https://webcache.googleusercontent.com/search?q=cache:Gpn3atMnZPoJ:https://therealdeal.com/2022/09/01/delshah-sells-land-beneath-dobro-rental-project-in-147m-recap/&cd=1&hl=en&ct=clnk&gl=us&client=firefox-b-1-d

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Safehold Inc. purchased six properties in five transactions for a total of $217.8 million and sold two properties in two transactions for a total of $44 million over the past 24 months.
The seller Start Treatment & Recovery Centers, Inc. had not purchased any other properties and sold one properties in one transactions for a total of $61.1 million over the same time period.

The property

The 22 Chapel Street parcel has frontage of 243 feet and is 100 feet deep with a total lot size of 27,434 square feet. The lot is irregular. The zoning is C6-2 which allows for up to 6 times floor area ratio (FAR) for commercial and up to 6.02 times FAR for residential. The city-designated market value for the property in 2022 is $20.2 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received $10,500 in ECB penalties and $16,050 in OATH penalties in the last year.

Development

On the lot, there is one new building construction project for a 180-unit, 149,870 square-foot R-2 building. The project was developed by Angelo Consentini with plans filed June 14, 2016 and permitted October 31, 2019.

The block

On this tax block, PincusCo has identified the owners of three of the three commercial properties representing 165,559 square feet of the 165,559 square feet. The two identified owners are Delshah Capital and Roman Catholic Church.

The majority, or 99 percent of the 165,559 square feet of built space are elevator buildings, with industrial buildings next occupying 1 percent of the space.

The seller

The PincusCo database currently indicates that Start Treatment & Recovery Centers, Inc. owned at least one commercial property in New York City with 15,765 square feet and a city-determined market value of $2.1 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single office property. It is located in Manhattan.

Direct link to Acris document. link