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“Chocolate” building near new Wegmans satisfies sweet tooth for free-market deals

Fairstead, Meadow Partners buy 275 Park Avenue

The new Wegmans at the Brooklyn Navy Yard isn’t the only place in the neighborhood to feed a chocolate fix.

The former Tootsie Roll factory turned loft-style apartment building in Clinton Hill sold for $67.25 million to a partnership of Fairstead and Meadow Partners, sources told The Real Deal.

The sale price for the Chocolate Factory Lofts at 275 Park Avenue comes close to recouping the $68 million that sellers the HK Organization and Brickman Real Estate paid near the height of the multifamily market back in 2014. The property has 125 units and spans seven stories.

While the addition of the supermarket with a cult following certainly didn’t hurt, sources said the deal only got done at that price because the state’s new laws limiting rent increases on stabilized units are driving more investors toward free-market properties.

A spokesperson for Fairstead and Meadow Partners confirmed the deal but declined to comment further. Representatives for the HK Organization and Brickman could not be reached. The buyers financed the purchase with a $56.9 million loan from Heitman. Meridian Capital Group’s Drew Anderman and Alan Blank arranged the debt.

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The new owners plan to make improvements to common areas and to renovate the building’s apartments, which became free-market after a J-51 tax exemption covering the property expired last year.

It’s the first time Fairstead – run by Jeffrey Goldberg and Will Blodgett – and the Tim Yantz-run Meadow Partners have teamed up.

HK and Brickman hired a team at Hodges Ward Elliott of Daniel Parker, Paul Gillen and Kyle van Buitenen to market the property earlier this year, before state lawmakers passed the new rent law. The brokers declined to comment.

The new rules have stifled the city’s investment market for multifamily properties, which saw transaction volume down 31 percent during the third quarter of 2019 from a year earlier.

With fewer stabilized properties that pencil out as good investments available, industry experts say buyers are increasingly interested in free-market properties, thus driving up prices.

Global Holdings Management Group is reportedly buying the 400-unit free-market Instrata apartment building at 10 East 29th Street in NoMad for close to $400 million.

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BrickmanFairstead CapitalMeadow Partners