HK Org, Brickman look to sell Clinton Hill apartment building near the Navy Yard

Sellers looking to start negotiations in the high $60M range for the onetime Tootsie Roll factory
By Rich Bockmann | March 25, 2019 03:30PM

275 Park Avenue in Brooklyn

The brand new Dock72 building at the Brooklyn Navy Yard is set to open this summer, bringing with it a slice of the 10,000 jobs the former ship yard is expected to add by next year.

Now, the owners of a former Tootsie Roll factory turned loft-apartment building nearby are looking to cash in on what they think will be a wave of demand from Navy Yard workers.

The HK Organization and Brickman Real Estate have put their 123-unit Chocolate Factory Lofts building in Clinton Hill up for sale with pricing guidance in the high-$60 million range, sources told The Real Deal. That works out to nearly $375 per gross square foot.

The pricing, however, is not that far off from the $68 million that property records show the owners paid for the property at 275 Park Avenue five years ago.

Representatives for the HK Organization and Brickman could not be immediately reached for comment. A Hodges Ward Elliott team of Will Silverman, Daniel Parker and Paul Gillen has the listing. The brokers declined to comment.

Harry Kotowitz and Howard Klaus’ HK Organization teamed up with Brickman Real Estate – headed by founder and president Bruce Brickman – to buy the seven-story building in 2014.

The previous owner, developer Aleksander Goldin, had purchased the factory property in 2000 and converted it into a mixed-use building with apartments under the J-51 tax program. The as-of-right incentive gives property owners a tax exemption and abatement on residential conversions in exchange for placing the units into the state’s rent stabilization program.

The Chocolate Factory Lofts’ J-51 exemption expired last year, and now all of the units are market rate.

In addition to the residential units, the property also has nearly 50,000 square feet of retail, which is leased to tenants including a small coffee shop and a gym.

The owners refinanced the property in 2017 with a $60 million loan from LoanCore Capital.

It’s not clear why the sellers are starting negotiations at a price that hasn’t appreciated much from the $68 million they laid out nearly five years ago. One explanation could be that they paid peak pricing at the top of the market in 2014.

Brickman owns its investments through private funds that have a finite life cycle, which could impact its decision to sell.

The neighborhood, meanwhile, is set to see an influx of new jobs. In addition to the WeWork-anchored Dock72 building that Rudin Management is codeveloping with Boston Properties, Steiner Studios is expanding its sound stage campus at the complex.

The Navy Yard’s Wegmans supermarket is set to open later this year, and the 1 million-square-foot Building 77 is 85 percent leased following a $185 million renovation.