RedSky and partner to sell several properties amid “uncertainty” over valuations

JZ Capital says it’s taken on a “much more direct role” and aims to speed up projects

New York /
Dec.December 02, 2019 07:00 AM
18 India Street in Brooklyn and RedSky Capital’s Benjamin Bernstein (Credit: ICSC and Google Maps)

18 India Street in Brooklyn and RedSky Capital’s Benjamin Bernstein (Credit: ICSC and Google Maps)

The investment firm backing most of Williamsburg’s prime retail real estate said it will look to sell several properties over the next two to three months. And the company has taken on a more active role managing the portfolio amid concerns that it could be difficult to cash out at projected values.

JZ Capital Partners changed course on Wednesday and announced it would not take a significant write-down on the real estate portfolio it owns with Brooklyn’s RedSky Capital, as it had forecasted several weeks earlier. The private equity firm had said in October said that it could write off as much as a third of the valuation of its $443 million share of the portfolio.

In addition to some of Williamsburg’s best retail properties, JZ Capital and RedSky own an office redevelopment in the neighborhood, large development sites in Greenpoint and Downtown Brooklyn and a number of properties in Miami.

But on its Wednesday earnings call, JZ Capital said its new appraisal came back with only a minimal difference in valuations. But board members still had doubts as to whether the properties could be sold at those levels.

“The board believes that significant uncertainty remains as to whether the real estate portfolio could be realized at these values,” read the chairman’s statement.

Wednesday’s pivot, however, does not rule out future write-downs.

“We believe investors remain in the dark about valuations and further write-downs would not be surprising,” Myrto Charamis, an analyst at Numis Securities who covers JZ Capital, wrote in a note Wednesday.

Representatives for JZ Capital could not be reached, and a spokesperson for RedSky declined to comment.

RedSky has been one of the most aggressive buyers in Brooklyn and beyond during this last boom cycle. But the company paid top dollar at the height of the market for many of its properties, and falling retail rents have called into question just how much value remains, as The Real Deal reported last week.

JZ Capital said it would put “several” of its properties up for sale in the next 60 to 90 days and that it is accelerating the timeline to cash out its investment — estimating it could take 24 to 36 months to maximize the value of the portfolio.

The company said it’s also taken a “much more direct role in the day-to-day management of both RedSky Capital and the real estate portfolio.”


Related Articles

arrow_forward_ios
(iStock/Illustration by Kevin Rebong for The Real Deal)
Year from Hell: 80% of Brooklyn businesses saw revenue drop
Year from Hell: 80% of Brooklyn businesses saw revenue drop
A photo illustration of the 960 Franklin Avenue rendering with Continuum Company's Bruce Eichner (iStock, 960 Franklin/Illustration by Kevin Rebong for The Real Deal)
Apartment project near Brooklyn Botanic Garden is shortened
Apartment project near Brooklyn Botanic Garden is shortened
330 Sackett Street and 72 Hicks Street (Compass, iStock)
Townhouses dominated Brooklyn luxury contracts — again
Townhouses dominated Brooklyn luxury contracts — again
David Umansky of Civic Builders and 720 Livonia Ave in Brooklyn (Photos via Google Maps, Civic Builders)
Charter school developer buys Brooklyn site out of bankruptcy
Charter school developer buys Brooklyn site out of bankruptcy
Modell's at 360 Fulton Street, Brooklyn (Google Maps)
Former Modell’s site in Downtown Brooklyn up for sale
Former Modell’s site in Downtown Brooklyn up for sale
This Manhattan Beach house tops the list of priciest contracts. (Google Maps, Mercer Real Estate)
Manhattan Beach townhouse tops Brooklyn’s luxury market
Manhattan Beach townhouse tops Brooklyn’s luxury market
689 Marcy Avenue in Bedford-Stuyvesant and 242, 244, 246 and 248 Bainbridge Street in Stuyvesant Heights (Google Maps)
Brookland Capital, Nager Management score Central Brooklyn deals
Brookland Capital, Nager Management score Central Brooklyn deals
2020 was strong for townhouse sales in New York City. (Getty)
2021 poised to be good year for townhouse sales
2021 poised to be good year for townhouse sales
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...