Urban Edge hands back $88.8M Kingswood Center in Sheepshead Bay to CMBS lender

The entity Series 2018-Cor3 in care of special servicer Midland Loan Services through the entity Comm 2018-Cor3 1630 East 15th St LLC acquired through a judicial foreclosure auction the Kingswood Center office and retail building (O5) at 1630 East 15th Street in Sheepshead Bay, Brooklyn. The highest auction bid was $34 million. The former owner was Urban Edge Properties through the entity UE Kingswood One LLC.
The deal closed on June 27, 2024 and was recorded on August 5, 2024. The property has 229,926 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $147 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.)
Urban Edge Properties bought the property on February 12, 2020, for $88.8 million. The signatory for the court was Alan Drezin. The signatory for Series 2018-Cor3 and Midland Loan Services was Andrea Helm. The contract date was June 27, 2024. This is a foreclosure auction for case 503913/2024 and $34 million was the highest bid. PincusCo reported that the property was going to be auctioned in June.

The lender, a CMBS loan owned by bondholders of COMM 2018-COR3, in care of trustee Wells Fargo, and Midland Loan Services, alleged the borrower did not make the May 6, 2023, payment and declared the loan in default by notice May 12, 2023.

The initial case, 516996/2023, was closed and replaced with 503913/2024.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Series 2018-Cor3 had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Urban Edge Properties had not purchased any other properties and had not sold any properties over the same time period.

The property

The office building in Sheepshead Bay has 229,926 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 126 feet and is 200 feet deep with a total lot size of 47,999 square feet. The lot is irregular. The zoning is C4-4A which allows for up to 4 times floor area ratio (FAR) for commercial and up to 4 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $35.5 million.

Violations and lawsuits

The property was involved in two lawsuits and zero bankruptcies over the past two years. The highest value suit was a $65.5 million commercial foreclosure concerning a loan filed on June 9, 2023, by Series 2018-Cor3 and COMM 2018-Cor3 against Urban Edge Properties. In addition, according to city public data, the property has received one DOB violation and $1,350 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on July 26, 2012. 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 Sheepshead Bay, The bulk, or 44 percent of the 26.7 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 17 percent of the space. In sales, Sheepshead Bay has 2 times the average sales volume among other neighborhoods with $529.2 million in sales volume in the last two years and is the 12th highest in Brooklyn. For development, Sheepshead Bay has had very little major development activity relative to other neighborhoods.It had 771,611 square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of three of the 13 commercial properties representing 238,868 square feet of the 313,085 square feet. The largest owner is Bennett A. Medoff, followed by BLDG Management and then Urban Edge Properties.
On the tax block, there was one new building construction project filed totaling 15,992 square feet. It is a 16-unit, 15,992 square-foot residential (R-2) building submitted by Chiu Wong with plans filed August 7, 2017 and permitted January 23, 2023.

The majority, or 77 percent of the 313,085 square feet of built space are office buildings, with mixed-use buildings next occupying 14 percent of the space.

The seller

The PincusCo database currently indicates that Urban Edge Properties owned at least three commercial properties in New York City with 471,055 square feet and a city-determined market value of $77.1 million. (Market value is typically about 50% of actual value.) The portfolio has $38 million in debt, borrowed from Apollo Global Management. Within the portfolio, the bulk, or 49 percent of the 471,055 square feet of built space are office properties, with retail properties next occupying 27 percent of the space. The bulk, or 73 percent of the built space, is in Brooklyn, with Bronx next at 27 percent of the space.

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