With his Downtown Brooklyn rental project nearing completion, Michael Shah sold the land beneath it to ground-lease specialist Safehold as part of a nearly $147 million recapitalization.
Shah’s Delshah Capital sold the fee position at its 20-story, 180-unit building at 22 Chapel Street to Jay Sugarman’s Safehold for an undisclosed price, Shah said Thursday.
Along with the sale, Delshah secured a new bridge loan from Arbor Realty Trust and injected $26 million into the project — a combination of sponsor equity and money raised on the crowdfunding platform CrowdStreet. The total recapitalization comes to $146.5 million.
Shah said the development at the corner of Flatbush Avenue and Chapel Street, which is in an Opportunity Zone and received the 421a tax abatement, “really lent itself to a wider base of retail equity investors,” rather than the institutions, high-net-worth investors and funds the developer typically works with.
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To qualify for the 35-year property tax abatement, Delshah set aside 30 percent of the building’s units — or 55 apartments — for renters earning up to 130 percent of the area median income.
Delshah acquired the site in 2018 for $26.5 million and financed the project with a $103 million construction loan from Bank OZK and EverWest Real Estate Partners.