Solomon Klein pays $70M to TL Management, Fortis for nursing home building in Bushwick

Nursing home investor Solomon Klein through the entity BV SNF Realty LLC paid $70 million to TL Management and Fortis Investment Group through the entity 48 Cedar Street LLC for the building occupied by the Buena Vida Rehabilitation & Nursing Center (I6) at 48 Cedar Street in Bushwick, Brooklyn.

The purchase was financed with a $52 million loan from Deutsche Bank and a subordinate $8.8 million loan given by Maryland-based Capital Funding Group.
The deal closed on June 9, 2023 and was recorded on June 16, 2023. The property has 131,650 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $531 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 along with a vacant parcel that is now known as 60 Cedar Street, on May 5, 2020, for $58.8 million. This sale does not include 60 Cedar Street. The signatory for TL Management and Fortis Investment Group was Sarah Rosenfeld and Zevi Kohn. The signatory for Solomon Klein was Solomon Klein.

Louis Handler filed plans in January 2022 for a 145-unit residential building at 60 Cedar Street, which is on tax lot 5.

Solomon Klein owns and operates nursing homes, including this one in New Jersey with members of the Herzka family.

In May 2018, TL Management and Fortis signed a contract to buy the Bueva Vista nursing home operations and the real estate, with portions of the deal summarized in this report from the New York State Public Health and Health Planning Council.

According to the 2018 document, the operating company was purchased at that time with no cash, and instead the buyers assumed $13 million of Buena Vista Corporation liabilities. TL Management and Fortis affiliates also bought the real estate, ie the building and land, for $54.4 million, but the actual money that changed hands was reduced by the assumed liabilities, so was just $41.42 million. To finance the purchase, People’s United Bank provided a $40 million acquisition loan, so the buyers only put $1.4 million in equity for the real estate. The new owners also structured a lease between the new landlord and the operating entity, which pays $300,000 per month or $3.6 million per year in a triple net lease structure. In addition, the real estate buying entity, 48 Cedar LLC, also provided a $3.97 million working capital loan to the operating entity.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Solomon Klein had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller TL Management had not purchased any other properties and had not sold any properties over the same time period.

The property

The specialty building in Bushwick has 131,650 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 400 feet and is 260 feet deep with a total lot size of 30,836 square feet. The lot is irregular. The zoning is R6 which allows for up to 2.43 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $35.6 million. The most recent loan totaled $40 million and was provided by People’s United Bank on May 5, 2020.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has received one DOB violation and $5,025 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The neighborhood

In Bushwick, The bulk, or 44 percent of the 33.6 million square feet of commercial built space are walkup buildings, with elevator buildings next occupying 18 percent of the space. In sales, Bushwick has 3.2 times the average sales volume among other neighborhoods with $1.1 billion in sales volume in the last two years and is the 3rd highest in Brooklyn. For development, Bushwick has 1.4 times the average amount of major developments relative to other neighborhoods and is the 12th highest in Brooklyn. It had 1.4 million 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.

The block

On this tax block, PincusCo has identified the owners of 20 of the 27 commercial properties representing 152,890 square feet of the 174,134 square feet. The largest owner is Shlomo Karpen, followed by New York Police Department and then Leonard T. D’Amico.
On the tax block, there were three new building construction projects totaling 113,339 square feet. The largest is a 145-unit, 105,666 square-foot residential (R-2) building submitted by Louis Handler and filed by Louis Handler with plans filed January 19, 2022 and permitted May 9, 2022. The second largest is a seven-unit, 4,781 square-foot residential (R-2) building submitted by Hugo Salazar with plans filed February 11, 2015 and it has not been permitted yet.

The majority, or 76 percent of the 174,134 square feet of built space are specialty buildings, with elevator buildings next occupying 12 percent of the space.

Direct link to Acris document. link