In a sober reminder of how apartment projects can go wrong, the bankruptcy auction for Eli Karp’s former Hello Nostrand development site in Brooklyn is scheduled for April 8, according to a Northgate listing.
The pending auction, which also includes a 94-unit building that Karp finished at 21 East 29th Street. Bidding, which ends at 5 p.m. April 7, starts at $57 million.
One fascinating detail revealed by the auction listing is that the East 29th Street building is one unit shy of qualifying for the crucial 421a tax break. Work on the 94th unit is said to be underway. The project’s underwriting surely assumed it would get 421a, without which multifamily projects typically do not pencil out.
Karp famously blamed Josh Zegen’s Madison Realty Capital for buying the debt on his projects and charging default interest, creating a mountain of debt that he could never pay down. Madison pointed out that had Karp paid his original lenders as promised, none of that would have occurred.
“I can’t get around how this happened,” Karp said in 2021. “I have lost everything.”
Karp put the Nostrand and East 29th Street sites into bankruptcy that year, one day before Madison’s scheduled foreclosure sale, as The Real Deal’s Keith Larsen reported. More drama followed at Karp’s 2415 Albemarle Road condo and other “Hello Living” projects. Elizabeth Cryan wrote about the saga in October.
Karp did one thing right: He put footings in the ground of the empty lot at 1580 Nostrand Avenue so it could qualify for 421a, which is necessary to get financing for a multifamily project there.
Karp’s Hello Living, which built 10 projects and planned six others, bought the site for $13 million in 2014. The Nostrand parcel is now zoned for 216 units, thanks to a 20 percent boost from City of Yes, which also reduced the required number of parking spots.
Those good breaks came far too late for Karp, but make the site more attractive to another developer. Time will tell if one tries to make a go of it.
What we’re thinking about: Every skyscraper constructed in Philadelphia — including its 10 tallest buildings — since the Center City Commuter Connection linked the Reading and Pennsylvania Railroads in 1983 is within a 10-minute walk of a station that was part of the project. That’s a real estate argument that advocates make in calling for Penn Station to be converted from a terminal to through-running. Do you support that idea? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: As Kathryn Brenzel reported in yesterday’s Daily Dirt, nearly 34,000 homes were completed last year (the most since 1965), but fewer than 16,000 received permits. What’s the difference between those terms? A permit is granted for construction to start; a completion means a certificate of occupancy is issued. The low permit number for 2024 signals that a production drought is coming. If you like to explore rabbit holes or just nerd out, dive into the city’s Housing Database.
Elsewhere…
A dispute between Hasidic and non-Hasidic Jews at Beth Jacob Ohev Sholom, the oldest Orthodox synagogue in Brooklyn and the only non-Hasidic one in Williamsburg, centers on the building itself. “Each side is accusing the other of plotting to sell the property, raze the temple and construct condos in its wake,” Gothamist reported.
Michael Alvandi’s City Urban Realty bought an 88-unit building at 244 West 72nd Street for $40 million from Fred and Nader Ohebshalom and other family members. The sale for the 16-story building, which dates to 1928 and also has four commercial spaces, works out to $450 per square foot. Israel Discount Bank of New York provided a $31.7 million mortgage.
I asked Alvandi what motivated the purchase.
“Elevated debt costs and long-term capital obligations are creating forced sales and generational opportunities like this one,” he said. “Multifamily and retail in certain pockets still have room to run.”
In a press release, Alvandi had said the firm planned to “breathe new life into the tired building.”
City Urban’s business model is to find properties in good locations that need rehabilitating and repositioning. It’s basically the commercial version of the adage, “Buy the worst house in the best neighborhood.”
Brooklyn’s Jimmy McMillan etched his name in history with the phrase “the rent is too damn high,” but renting is now more economical than owning in all of the 100 largest U.S. metro areas, according to a new LendingTree analysis.
The difference between median gross rent ($1,406) and median housing costs ($1,904) for homes with a mortgage is $498 a month, the company found. The largest differences are in San Francisco ($1,414), Bridgeport ($1,367), and New York ($1,340).
One comment: Et tu, Bridgeport?
Closing time
Residential: The priciest residential sale Tuesday was $14.5 million for a co-op unit at 65 Central Park West in Lincoln Square. Katie Thurber and Ryan Serhant had the listing.
Commercial: The most expensive commercial closing of the day was $103.3 million for three lots at 35-39 East 60th Street in Lenox Hill. Extell Development purchased the property from Solil Management.
New to the Market: The highest price for a residential property hitting the market was $34 million for a co-op unit at 101 Central Park West on the Upper West Side. Alexa Lambert of Compass has the listing.
Breaking Ground: The largest new building applications filed were for a combined 82,600-square-foot, 96-unit affordable housing project at 543-545 East 181st Street in East Tremont. Architect Amie Gross filed the permits on behalf of PIBLY Residential Programs.
— Matthew Elo