Yoel Zagelbaum affiliate pays $30.5M for homeless shelter building in Gowanus

A Yoel Zagelbaum affiliate through the entity 399 3rd Avenue Propco LLC paid a total of $30.5 million for a homeless shelter building in Gowanus in two transactions.
In the first, the buyer paid $24.7 million to Mukeshkumar Patel through the entity Jai Shri Krishna LLC for the leasehold on the hotel building (H3) at 399 3rd Avenue that houses an adult family homeless shelter in Gowanus, Brooklyn. At the same time, the Yoel Zagelbaum affiliate through the entity 399 3rd Avenue Propco LLC paid $5.8 million to the fee owner Tracy Cohen through the entity 1320 Atlantic Realty Corp. for the fee under the hotel building (H3) at 399 3rd Avenue in Gowanus, Brooklyn.
The deals closed on August 4, 2022 and were recorded on August 17, 2022.
The signatory for Tracy Cohen was Tracy Cohen. The signatory for Yoel Zagelbaum was Yoel Zagelbaum. The prior signatory for the ground lease was Sanford Cohen.
This is a homeless shelter for adult families operated by Praxis Housing Initiatives.
The property has 27,774 square feet of built space according to PincusCo analysis of city data.
The signatory for Mukeshkumar Patel was Mukeshkumar Patel. The signatory for Yoel Zagelbaum was Yoel Zagelbaum.

To finance the purchase, the Yoel Zagelbaum affiliate through the entity 399 3rd Avenue Propco LLC as borrower signed a acquisition loan with lender Bear Creek Asset Management through the entity Bcth Investors, LLC valued at $21.4 million.

Prior sales and revenue

Prior to this transaction, Pincusco has records that the buyer Yoel Zagelbaum purchased two properties in two transactions for a total of $29.9 million and has no record it sold any properties over the past 24 months.
The seller Mukeshkumar Patel had not purchased any other properties and had not sold any properties over the same time period. The former owner according to the Department of Housing Preservation and Development is Mukeshkumar Patel, head officer. The business entity is Jai Shri Krishna Llc.

The property

The 399 3rd Avenue parcel has frontage of 100 feet and is 95 feet deep with a total lot size of 9,575 square feet. The zoning is C8-2 which allows for up to 2 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $6.4 million.The most recent loan totaled $7.5 million and was provided by Golden Bank on December 30, 2021.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received one DOB violation, $3,985 in ECB penalties, three housing violations, and $4,335 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on February 27, 2020. 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 Gowanus, the bulk, or 47 percent of the 9.3 million square feet of commercial built space are industrial buildings, with elevator buildings next occupying 19 percent of the space. In sales, Gowanus has near average sales volume among other neighborhoods with $367.5 million in sales volume in the last two years and is the 16th highest in Brooklyn. For development, Gowanus is the 6th most active neighborhood among other neighborhoods. It had 5.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 60 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of three of the 11 commercial properties representing 66,294 square feet of the 579,989 square feet. The largest owner is Mukeshkumar Patel, followed by Joseph Zafarani and then Quinlan Development Group.
There are two active new building construction projects totaling 222,366 square feet. The largest is a 197-unit, 210,936-square-foot R-2 building developed by Kyle Cohen with plans filed October 15, 2021 and it has not been permitted yet. The second largest is a 11,430-square-foot B building developed by Joseph Zafarani with plans filed January 14, 2011 and permitted October 26, 2012.

the majority, or 56 percent of the 579,989 square feet of built space are industrial buildings, with office buildings next occupying 15 percent of the space.

The seller

The PincusCo database currently indicates that Mukeshkumar Patel owned at least one commercial property in New York City with 27,774 square feet and a city-determined market value of $6.4 million. (Market value is typically about 50% of actual value.) The portfolio has $7.5 million in debt, borrowed from Golden Bank. The portfolio consists of at least a single hotel property. It is located in Brooklyn.

The buyer

The PincusCo database currently indicates that Yoel Zagelbaum affiliates owned at least three commercial properties in New York City with 64,592 square feet and a city-determined market value of $9.2 million. (Market value is typically about 50% of actual value.) The portfolio has $30.2 million in debt, borrowed from Bear Creek Asset Management and BCTH Investors. Within the portfolio, the bulk, or 56 percent of the 64,592 square feet of built space are specialty properties, with D1 properties next occupying 27 percent of the space. The bulk, or 56 percent of the built space, is in Manhattan, with Bronx next at 44 percent of the space.

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