Three Brooklyn properties headline $50M commercial auction

New York /
May.May 03, 2011 07:12 PM
From left: Misha Haghani, Perry Finkelman and a rendering of 271-275 Sea Breeze Avenue

Over a six-day period next month, Paramount Realty USA will host an auction of $50
million worth of New York commercial real estate.

Misha Haghani, a principal at Paramount, which was hired by the various owners
of the six properties to hold the auction, said it’s the largest group of New York City
commercial properties to be auctioned in at least 10 years.

The properties include stalled condominiums in Crown Heights, Coney Island-
Brighton Beach and East Harlem, and mixed-use developments in Sheepshead Bay,
East Harlem, and Roslyn Heights, LI.

Headlining the auction is 271-275 Sea Breeze Avenue, near the border of Brighton
Beach and Coney Island, where American Development Group had planned to erect
a 151,000-square-foot, 22-story luxury condominium.

Perry Finkelman, a principal of American Development Group, which already
poured $22 million into what he estimated to be an $85 million project, said that
the foundation is in place for the structure and an automated parking system. But
construction stalled at the site during the downturn, and despite the rebounding
market and the unobstructed waterfront location, the lack of comparable properties
is weighing on the developer.

“The comps are not available because this is a property comprised solely of
waterfront units,” Finkelman said. “Even two or three blocks inland is a totally
different market.”

Combine the shortage of comps with the restrictive nature of the lending market,
and Finkelman acknowledged that American Development Group would have to
sink much of its own equity into the project — equity it feels is better served for
other properties currently in development. As a result, he listed Sea Breeze Avenue
site with Paramount.

“We feel we’ll be getting the same value from six weeks of marketing and auctioning
with Paramount as we would enduring the six- to nine-month process of listing it
with a broker,” Finkelman said. “And it’s a lot less of a headache.”

The other Brooklyn condo up for auction, 393 Lefferts Avenue, has had a
seven-story shell in place since before the current owners, a partnership of Uri
Mermelstein and Hertzl Moezinia, purchased the note on the site with a $9.9 million
appraisal in 2007 and subsequently gained control of the site, Haghani said. The
developers intended to build a 61,000-square-foot, 33-unit condo, but Mermelstein
and Moezinia didn’t touch the property before dissolution compelled them to sell,
Haghani said. Neither Mermelstein nor Moezinia was immediately available for
comment.

Similarly, a partnership dissolution is the reason behind the auctioning of an
86,000-square-foot buildable development site at 2554 East 16th Street in
Sheepshead Bay, Haghani. The original owner, which Haghani would not disclose
but city records show is an entity called 16 Ave Z LLC, acquired the property for more than $7.5
million in 2004 and gained approval to build 30 residential units, 5,000 square feet
of retail space, a 23,300-square-foot office space, 10,000 square feet of healthcare
facilities, and 186 parking spaces, according to the Paramount auction listing. It wasn’t immediately clear who was behind the LLC.

The three Brooklyn properties are available in a sealed bid auction with a June 9
deadline.

The remaining three properties — a 17,433-square-foot residential building at
2264 Second Avenue Near 116th Street, a 14,100-square-foot building at 2027 First
Avenue and an office building at 175 Roslyn Road in Long Island — will be sold in a
conventional auction at the Roosevelt Hotel June 15.

“All the private owners opted to sell at auction to show prospective buyers that
they’re serious about selling the property without enduring the long process
of marketing with a broker and the subsequent negotiation prior to a closing,”
Paramount’s Haghani said. “And, from the bottom of my heart, this is a good
time to do it — development sites are trading again and capitalization rates are
compressing.”


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