Delshah sells land beneath DoBro rental project in $147M recap

Michael Shah’s firm sold fee interest in nearly completed 180-unit building to Safehold

22 Chapel Street in Brooklyn with Safehold’s Jay Sugarman and Delshah’s Michael Shah (Google Maps, Safehold Inc., LinkedIn)
22 Chapel Street in Brooklyn with Safehold’s Jay Sugarman and Delshah’s Michael Shah (Google Maps, Safehold Inc., LinkedIn)

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.

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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.