Lender lists troubled RedSky’s Miami Design District portfolio

Redsky is liquidating its assets after defaulting on a loan tied to a Brooklyn property in March

TRD New York /
Apr.April 08, 2020 03:15 PM
Clockwise from top left: 3995 North Miami Ave., 5 Northeast 39th St., 1 Northeast 40th St. through 35 Northeast 40th St. (Credit: Google Maps, iStock)

Clockwise from top left: 3995 North Miami Ave., 5 Northeast 39th St., 1 Northeast 40th St. through 35 Northeast 40th St. (Credit: Google Maps, iStock)

RedSky Capital’s entire Miami Design District portfolio, encompassing 14 buildings with 125,000 square feet of space, is hitting the market as the troubled Brooklyn-based development group seeks to sell much of its real estate.

Cushman & Wakefield is listing the 2.5-acre site as a potential redevelopment opportunity for a mixed-use project totaling over 628,000 square feet. The property is in a designated Opportunity Zone, which allows developers and investors the ability to gain significant tax breaks for investing in certain areas.

RedSky secured $220 million in debt from Apollo Commercial Real Estate Finance to acquire the assemblage, which mostly consists of mid-century retail buildings.

The listing is unpriced, but is “being offered to the market by a lender at projected pricing that is roughly one-half the original developer’s basis in the parcels,” according to Cushman & Wakefield’s offering memorandum.

Brooklyn-based RedSky and London Stock Exchange-listed partner JZ Capital Partners paid roughly $236 million to purchase the properties through separate deals with Thor Equities and Tishman Corp. between 2015 and 2016. That means the listing price may be about $118 million.

When Redsky and JZ Capital Partners entered the Miami market, they scooped up retail properties in the Miami Design District at top dollar, in one deal paying more than $3,132 per square foot. The group was seeking to capitalize on the success of the Design District, which is largely owned by Dacra’s Craig Robins, his partner, LVMH affiliate L Catterton Real Estate, which each own 38.75 percent of the district; and Brookfield Property Partners, which owns another 22.5 percent. The area features high-end boutiques such as Hermès, Christian Dior, Louis Vuitton, Cartier and Gucci.

Redsky and JZ were planning to develop a mixed-use project with parking, retail and office space with Miami architect Chad Oppenheim.

The listed properties include:.

  • 1 Northeast 40th Street – 19,436 square feet
  • 35 Northeast 40th Street – 17,391 square feet
  • 3995 North Miami Avenue – 32,733 square feet
  • 10 Northeast 40th Street – 5,000 square feet
  • 28 Northeast 40th Street – 723 square feet
  • 40 Northeast 40th Street – 4,649 square feet
  • 50 Northeast 40th Street – 7,517 square feet
  • 56 Northeast 40th Street – 4,174 square feet
  • 15 Northeast 39th Street & 3925 North Miami Avenue – 10,593 square feet
  • 19 & 21 Northeast 39th Street – 8,310 square feet
  • 45 Northeast 39th Street – 8,533 square feet
  • 53 & 55 Northeast 39th Street – 1,702 square feet
  • 75 Northeast 39th Street – 3,103 square feet
  • 81 Northeast 39th Street – 3,103 square feet

RedSky Capital, formed in 2006, is led by Ben Bernstein and Ben Stokes. The firm brought the first Apple store to Brooklyn and was one of the most aggressive investors in Brooklyn’s Williamsburg retail real estate this cycle.

RedSky has fallen on hard times and has been liquidating its portfolio in recent months, after JZ Capital raised concerns about its valuation in October. JZ Capital said at that time that it could write off as much as a third of the valuation of its $443 million share of RedSky’s portfolio.

RedSky recently defaulted on a $154.6 million loan for a Brooklyn development site from its lender Apollo Commercial Real Estate Finance. The lender said RedSky stopped paying the mortgage in March.

RedSky also recently listed a full block development site on the Greenpoint waterfront at 1 Java Street in Brooklyn for $165 million.

Since 2013, the company has purchased more than $500 million of real estate in the Miami Design District, Wynwood and West Palm Beach, according to its website.

In South Florida, RedSky and JZ Capital Partners own the Esperanté Corporate Center in downtown West Palm Beach. The group bought the property in 2016 from Cornerstone Real Estate Advisers and Crocker Partners for $125.75 million.

RedSky also owns Cube Wynwyd, an eight-story office building at 222 Northwest 24th Street in Wynwood.


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