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Silverstein Foreclosing on Brooklyn's Tallest Building

The tallest building in Brooklyn is facing a public foreclosure auction a year after the developer put rental and retail portions of it up for sale.

JDS Development has defaulted on a $240M mezzanine loan backed by 9 DeKalb Avenue, a 93-story residential tower also known as the Brooklyn Tower that was completed early last year.

JLL has been tapped by Silverstein Capital Partners, which originated the mezzanine loan in 2019, to conduct a UCC foreclosure auction on June 10, according to JLL marketing materials.

In February, Silverstein took over nearly $430M in senior loans originated by Otera Capital for the supertall at 9 DeKalb, including construction and acquisition debt.

The 1,067-foot-tall building—the first supertall in Brooklyn and the tallest building in NYC outside of Manhattan—includes 417 rental units, 143 residential condos on upper floors, and 130K SF of retail including space occupied by luxury gym chain Life Time Fitness, which has a 20-year-lease.

In March 2023, JDS Development tapped Newmark to list the space at 9 DeKalb encompassing the rental apartments and retail space. NYC-based JDS said it would retain ownership of the 143 condos, according to a Green Street alert.

The March 2023 listing estimated the value of the property at more than $600M, or at least $1.5M per unit, which would have made it one of the most lucrative multifamily transactions in NYC since the pandemic began. Brooklyn Tower is located in Downtown Brooklyn, near the Fort Greene, Boerum Hill and Cobble Hill neighborhoods.

The base of the building is adjacent to the former Dime Savings Bank building, which dates to the early 1900s. The site was sold to JDS and New York-based Chetrit Group in 2015 for $90 million. JDS later bought out Chetrit's stake in the project.

In exchange for limiting rents on 30% of the rental units to tenants making no more than 130% of the area's average median income, the property has a tax abatement for 35 years.

The 93-story building's apartments range from studios to three bedrooms. High-end finishes include European white oak flooring, Miele appliances, floor-to-ceiling windows and 11-foot ceilings.

Amenities include a 75-foot pool and outdoor lounge space, a 66th-floor sky park and an 85th-floor sky lounge, which has a full-length basketball court and a private dining area, among other features. The Life Time space encompasses 77,000 SF, including the gym and coworking components.

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Reprinted with permission from the Fri, 29 Mar 2024 05:55:07 EDT online edition of GlobeSt © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.