Townhouse Rental II, L.L.C. pays $6M to Benzion Morgenstern for residential walkup in Bed Stuy

Townhouse Rental II, L.L.C. paid $6 million to Benzion Morgenstern through the entity Madison Street Equities LLC for the midblock eight-unit residential walkup building at 242 Madison Street in Bed Stuy, Brooklyn.
The deal closed on March 29, 2022 and was recorded on April 14, 2022.

The property has 9,486 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $632 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 on June 28, 2012, for $1.2 million. The signatory for Benzion Morgenstern was Benzion Morgenstern. The signatory for Townhouse Rental II, L.L.C. was Carter Martin.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Townhouse Rental II, L.L.C. purchased 33 properties in 33 transactions for a total of $111.4 million and has no record it sold any properties over the past 24 months.
The seller Benzion Morgenstern had not purchased any other properties and had not sold any properties over the same time period. The former owners according to the Department of Housing Preservation and Development includes Ben Morgenstern, head officer and Mordechai Feigenblatt, officer. The business entity is Madison Street Equities Llc.

The property

The 242 Madison Street parcel has frontage of 28 feet and is 100 feet deep with a total lot size of 2,842 square feet. The zoning is R6B which allows for up to 2 times floor area ratio (FAR) for residential with inclusionary housing. The property is in the Bedford Historic District. The city-designated market value for the property in 2022 is $1.1 million.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has received one housing violation and $900 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 $5 million on this tax lot.

The neighborhood

In Bed Stuy, the bulk, or 38 percent of the 92.5 million square feet of commercial built space are 1-4 family buildings, with residential elevator buildings next occupying 20 percent of the space. In sales, Bed Stuy has 1.5 times the average sales volume among other neighborhoods with $417.3 million in sales volume in the last two years and is the 6th highest in Brooklyn. For development, Bed Stuy is the 8th most active neighborhood among other neighborhoods. It had 4.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 5 percent of the neighborhood’s built space. There were nine pre-foreclosure suit filed among other residential walkup buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 13 of the 21 commercial properties representing 212,202 square feet of the 238,422 square feet. The largest owner is City of New York, followed by Oak Tree Residential and then Hillel Fischman. There are no active new building construction projects on this tax block.

The majority, or 38 percent of the 318,360 square feet of built space are specialty buildings, with residential walkup buildings next occupying 29 percent of the space.

The seller

The PincusCo database currently indicates that Benzion Morgenstern owned at least three commercial properties with 17,396 square feet and a city-determined market value of $2.4 million. (Market value is typically about 50% of actual value.) The portfolio has $16.5 million in debt, borrowed from Spencer Savings Bank and Derby Copeland Capital. Within the portfolio, all identified are residential walkup properties. The bulk, or 85 percent of the built space, is in Brooklyn, with Manhattan next at 15 percent of the space.

The buyer

The PincusCo database currently indicates that Townhouse Rental II, L.L.C. owned at least 25 commercial properties with 102,175 square feet and a city-determined market value of $26.9 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 52 percent of the 102,175 square feet of built space are residential walkup properties, with 1-4 family properties next occupying 44 percent of the space. The bulk, or 73 percent of the built space, is in Brooklyn, with Queens next at 27 percent of the space.

Surrounding

Within a 400-foot radius of 242 Madison Street, Pincusco identified three commercial real estate items of interests occurred over the past 24 months.
Of those three items, two were for major renovation including a certificate of occupancy change. They were two permits with a total initial cost of $1.4 million. The most recent of these two items was the permit on December 9, 2021 for a 3,980-square-foot R-2 building with four residential units at 235 Monroe Street.
One of those three items was a loan which Forsyth Street borrowed $40.8 million from NYC Housing Development Corporation secured by the 3,800-square-foot, eight-unit rental (C1) on 221 Madison Street and 78 other properties on July 22, 2019.

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