The rush to beat the 421a property tax break’s expiration in June left the city awash in qualified sites waiting for a developer to step in and build apartments. At three such locations in Bushwick, Jeff Simpson’s Arch Companies is heeding the call.
Arch has taken control of three stalled luxury apartment projects at 435 Central Avenue, 1010 Bushwick Avenue and 1351 DeKalb Avenue in a restructuring of an existing ownership group led by investor Dan Saklakov, who described Arch’s involvement as a “very fortunate development of the circumstances.”
Arch will now fully manage and develop the three projects, which appeared to be on life support in recent years.
Saklakov’s group acquired the three sites in 2016 and 2017 for a combined $9.2 million, records show, and plans were filed for three 421a projects that would yield a combined 61 residential units across 80,000 square feet.
But in 2020, the project’s lenders — Kassin Sabbagh Realty on 1010 Bushwick Avenue and 1351 DeKalb Avenue, and Avant Capital on 435 Central Avenue — initiated foreclosure proceedings on each of them, according to court records.
Saklakov blamed “unforeseen and unfortunate circumstances” such as the pandemic for the foreclosure filings and said the projects had been “impaired by egos of the stakeholders,” though he did not go into detail.
Saklakov’s ownership group reached settlements with KSR and Avant to avoid the foreclosures (neither lender responded to a request for comment).
Now Arch is tasked with getting the projects across the finish line, which it expects to do by 2024.
Just how much Arch invested into the projects was not disclosed, but Saklakov described it as “a very substantial amount.”
“We control the assets going forward,” Simpson said. “Whatever cash we invested is enough to take on that responsibility and obligation to run the day-to-day operation.”
Eli Terry and Jonathan Aghravi of JBA Equities brokered the deal. JBA Equities did not respond when reached for comment.
Saklakov said he was grateful to the lenders and to Arch, who he described as “very persistent” in their quest to reach a deal.
“You need to look reality in the face for you to be able to continue running the project rather than be run by the project,” Saklakov said.
Arch, which was not a prior investor in the projects, “had been tracking this development for some time,” according to Simpson, whose firm has been accumulating Brooklyn assets in recent weeks, through acquisitions or other means.
In September, Arch bought a development site at 1633 East 16th Street in Midwood for $22.3 million from retail developer AB Capstone, which had planned a four-story retail building on the site. It’s unclear what Arch plans to do there.
Also last month, Arch won a UCC foreclosure auction for the equity interests in Eli Karp’s bankrupt apartment project at 1580 Nostrand Avenue in Flatbush, where Arch had been a mezzanine lender.
Arch still faces some obstacles on that site. The firm alleged in a lawsuit that Karp entered into a master lease with another tenant without the bankruptcy court’s consent, which could prevent the project from qualifying for 421a.
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