Watermark Capital inks lease at Carroll Gardens church property for $3M resi conversion

Wolfe Landau of Watermark Capital Group and Shulem Kessler signed a lease February 5, 2024, for the parish hall building of St. Agnes Roman Catholic Church, at 433 Sackett Street in Carroll Gardens, Brooklyn, with a term of 49 years. The developer plans to spend $3 million converting the 21,108-square-foot building into residential rental apartments, according to the filing the church made yesterday, as part of a required process for a church or nonprofit that sells or leases a significant asset.
Case 507883/2024 LINK

This is at least the fifth such deal Landau has signed with a church since 2022, including both purchases and leases. The others are St. Roch’s Roman Catholic Church, St. Patrick, Hanson Place Central United Methodist Church, and the Carmelite monastery in Cypress Hills.
This lease is for a portion of the tax lot that is occupied by the parish hall building, which has 21,108 gross square feet. The lease does not include St. Agnes church, which spans all of Hoyt Street from Degraw Street to Sackett Street.

The lease has an initial term of 49 years, with the triple-net rent commencing at $250,000, but for the first four years the tenant only pays an adjusted annual rent, that starts at $125,000 per year. The lease states the developer will invest approximately $3 million into the conversion to residential.

According to the lease, “Tenant agrees to redevelop the Building and primarily use the Premises for “market based” multi-family residential purposes only (currently permitted for NYC Planning Use Group 2 in effect as of the Effective Date or any similar NYC Planning Use Group for market-based multi-family residential properties enacted after the Effective Date) and ancillary residential amenity uses (such as gyms and laundry rooms) that are customary for residential apartment buildings in Brooklyn.”

The lease says there were no brokers. A team from JLL including Bradford Burton, Guthrie Garvin and Brendan Maddigan had marketed the property.

The PincusCo database currently indicates that Watermark Capital Group owned at least 121 commercial properties with 1,215,933 square feet, 1,448 residential units and a city-determined market value of $229.1 million. (Market value is typically about 50% of actual value.) The portfolio has $62.5 million in debt, with top three lenders as Signature Bank, Bridge City Funding, and Broadview Capital respectively. Within the portfolio, the bulk, or 68 percent of the 1,215,933 square feet of built space are walkup properties, with elevator properties next occupying 25 percent of the space. The bulk, or 93 percent of the built space, is in Brooklyn, with Queens next at 7 percent of the space.

The surrounding

Within a 400-foot radius of 433 Sackett Street , PincusCo identified one commercial real estate item of interests occurred over the past 24 months. It was a loan which Kamyar Nemazee borrowed $5 million from First Republic Bank secured by the 3,360-square-foot, three-unit three-family building (C0) on 409 Sackett Street on November 28, 2022.

Direct link to the property’s ACRIS page.