Watermark signs $4.3M ground lease in Jamaica for likely dev site, 7th buy in 2 years

Watermark Capital Group through the entity Hillside Residence LLC as tenant signed a ground lease valued at $4.3 million with Khedouri Associates through the entity EIK Jamaica Associates, LLC as landlord, for the retail building (K1) at 159-02 Hillside Avenue in Jamaica, Queens. A PincusCo analysis of the location and lease value determines that the transaction is likely as a development site.
This is Watermark Capital Group’s seventh purchase in two years, according to a PincusCo analysis of city records, and it has put additional properties under contract.
The deal closed on June 5, 2024 and was recorded on June 10, 2024. The property has 11,837 square feet of built space and 46,640 square feet of additional air rights for a total buildable of 58,484 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $362 and the price per buildable square foot is $73 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 signatory for Khedouri Associates was Lawrence Khedouri. The signatory for Watermark Capital Group was Wolfe Landau. This is a 99-year ground lease.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Watermark Capital Group purchased six properties in six transactions for a total of $101.6 million and sold one property in one transaction for a total of $4 million over the past 24 months.
The seller Khedouri Associates had not purchased any other properties and had not sold any properties over the same time period.

The property

The retail building in Jamaica has 11,837 square feet of built space and 46,640 square feet of additional air rights for a total buildable of 58,484 square feet according to a PincusCo analysis of city data. The parcel has frontage of 125 feet and is 117 feet deep with a total lot size of 14,621 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 $3.5 million.

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 two DOB violations and $2,350 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 Jamaica, The bulk, or 34 percent of the 29.2 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 14 percent of the space. In sales, Jamaica has near average sales volume among other neighborhoods with $283 million in sales volume in the last two years and is the 6th highest in Queens. For development, Jamaica has 2.2 times the average amount of major developments relative to other neighborhoods and is the 3rd highest in Queens. It had 2.4 million square feet of commercial and multi-family construction under development in the last two years, which represents 8 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of one of the 10 commercial properties representing 2,592 square feet of the 38,879 square feet. The identified owner is Equity Group.
There are no active new building construction projects on this tax block.

The majority, or 68 percent of the 38,879 square feet of built space are retail buildings, with mixed-use buildings next occupying 32 percent of the space.

The buyer

The PincusCo database currently indicates that Watermark Capital Group owned at least 123 commercial properties with 1,448 residential units in New York City with 1,414,398 square feet and a city-determined market value of $274.2 million. (Market value is typically about 50% of actual value.) The portfolio has $141 million in debt, with top three lenders as BridgeCity Capital, Signature Bank, and Bridge City Funding respectively. Within the portfolio, the bulk, or 58 percent of the 1,414,398 square feet of built space are walkup properties, with elevator properties next occupying 22 percent of the space. The bulk, or 94 percent of the built space, is in Brooklyn, with Queens next at 6 percent of the space.

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