A New Jersey-based investor is slated to bring a 37-unit condominium development to the Clinton Hill area of Brooklyn after buying a nearly complete property out of bankruptcy, The Real Deal has learned.
Commercial real estate investment firm Madison Realty Capital is providing $13 million in financing for the New Jersey buyer’s purchase of a defaulted note on a property at 143-159 Classon Avenue, which was previously held by Community Preservation Corporation and had an outstanding balance of around $17 million, Madison co-founder Josh Zegen told The Real Deal today at the International Council of Shopping Centers’ annual RECon retail conference.
While Zegen would not comment on the exact amount the buyer was paying for the property, or the buyer’s identity, he said the total sale price was lower than the $17 million balance.
An investment group headed by developers Mark Junger and Moses Rosner originally broke ground on the project in 2007 but fell into financial difficulties and ultimately filed for bankruptcy.
The site was originally slated to hit the foreclosure auction block, but the bankruptcy derailed the process, Zegen said. Then the New Jersey investor, who has experience working with distressed assets, swooped in and purchased the property directly.
The Robert Scarano-designed project is in various stages of completion, with143 Classon Avenue almost finished and 159 Classon Avenue requiring significant construction work before receiving its final certificate of occupancy, according to Madison.
While the bankruptcy process is unpredictable, the new owner is expected to take title to the property within three to six months, Zegen said, and will begin construction to complete the condo project.
“This was a deal a lot of people were trying to do something with but there were a lot of moving pieces,” Zegen said, referencing his company’s dual focus on development – Madison owns Silverstone Property Group, which is developing an 80-unit rental project in Dumbo – and in providing debt and equity financing.
Madison provided $9 million in financing to the investor following the closing of the deal and will contribute an additional $4 million in construction financing once he takes title to the property, Zegen said.