Unknown buyer acquires $7.7M note on Brooklyn properties in foreclosure

The entity Fulton Lex Classon, LLC bought a note with an original principal of $7.7 million from former lender City Urban Realty secured by Juan Lopez’s four-unit mixed-use building (S4) at 701 Fulton Street in Fort Greene, Brooklyn, and an industrial building (F9) at 173 Lexington Avenue in Bedford Stuyvesant, Brooklyn, and two-unit mixed-use building (S2) at 703 Fulton Street in Fort Greene, Brooklyn.
The deal closed on June 20, 2023 and was recorded on June 30, 2023. The prior lender was City Urban Realty held debt that had an original loan amount of $7.7 million. The four properties have 15,472 square feet of built space and 7,041 square feet of additional air rights for a total buildable of 22,074 square feet according to a PincusCo analysis of city data.
The signatory for Juan Lopez was Juan Lopez. City Urban Realty filed a pre-foreclosure action last year.  LINK 532344/2022

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 property on 701 Fulton Street.

Prior sales and revenue

The owner according to the Department of Housing Preservation and Development is Juan Lopez, individual owner. Out of the four properties, one with a total of 15,472 square feet of built space generated revenue of $75,462 per year.

The property

The mixed-use building with 4 residential units in Fort Greene has 15,472 square feet of built space and 7,041 square feet of additional air rights for a total buildable of 22,074 square feet according to a PincusCo analysis of city data. The parcel has frontage of 18 feet and is 49 feet deep with a total lot size of 2,303 square feet. The lot is irregular. The zoning is R7A which allows for up to 4 times floor area ratio (FAR) for residential with inclusionary housing. The city-designated market value for the property in 2022 is $2.3 million. The most recent loan totaled $7.7 million and was provided by Fulton Lexington Classon Associates LLC on March 20, 2020.

Violations and lawsuits

The properties were involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $7.7 million commercial foreclosure concerning a loan filed on November 4, 2022, by City Urban Realty against Juan Lopez. In addition, according to city public data, the properties have received one DOB violation, $18,750 in ECB penalties, and $19,050 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 Fort Greene, The bulk, or 34 percent of the 12.4 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 23 percent of the space. In sales, Fort Greene has 1.6 times the average sales volume among other neighborhoods with $570.8 million in sales volume in the last two years and is the 12th highest in Brooklyn. For development, Fort Greene has 2.2 times the average amount of major developments relative to other neighborhoods and is the 8th highest in Brooklyn. It had 2.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 18 percent of the neighborhood’s built space. There were two pre-foreclosure suit filed among other mixed-use buildings in the past 12 months.

The block

On the tax block of 701 Fulton Street, PincusCo has identified the owners of five of the 21 commercial properties representing 18,176 square feet of the 128,309 square feet. The largest owner is Juan Lopez, followed by Joseph Smalkowski and then David Dilmanian.
On the tax block, there were two new building construction projects totaling 7,164 square feet. The largest is a six-unit, 3,764 square-foot residential (R-2) building submitted by Avi Baranes with plans filed July 31, 2019 and it has not been permitted yet. The second largest is a two-unit, 3,400 square-foot residential (R-3) building submitted by Melvin Berg with plans filed March 7, 2017 and it has not been permitted yet.

The majority, or 70 percent of the 128,309 square feet of built space are walkup buildings, with mixed-use buildings next occupying 29 percent of the space.

The borrower

The PincusCo database currently indicates that Juan Lopez owned at least four commercial properties with 10 residential units in New York City with 15,472 square feet and a city-determined market value of $5.6 million. (Market value is typically about 50% of actual value.) The portfolio has $7.7 million in debt, borrowed from Fulton Lexington Classon Associates LLC. Within the portfolio, the bulk, or 76 percent of the 15,472 square feet of built space are mixed-use properties, with industrial properties next occupying 24 percent of the space. They are all located in Brooklyn.

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