While everyone says that the looming commercial real estate crash is nothing to worry about since, well, everyone's been worrying about it for so long and nothing bad has happened yet (except for the whole regional bank crisis last March when virtually anyone who is not JPM almost imploded), every day we get a new and more shocking foreclosure or default.
Today, it is the infamous Brooklyn Tower, the 1066-foot building, sometimes called the Eye of Sauron, which is the tallest in all of Brooklyn. According to marketing materials from JLL, Silverstein Capital Partners has scheduled a foreclosure auction for 9 DeKalb Ave., JDS Development's Brooklyn Tower.
JDS took out a $240M mezzanine loan from Larry Silverstein’s firm in 2019 as part of a $664M debt package to build the 93-story, 1,066-foot tower in Downtown Brooklyn. Yet despite what the media said was a flood of interest in the property, less than five years later, JDS has defaulted on the loan, according to the foreclosure notice, first reported by ten31 on X, triggering the foreclosure auction, scheduled for June 10.
It's all happening at the Tower of Sauron pic.twitter.com/OZIjlQJ3mP
— Hiten Samtani (@hitsamty) March 27, 2024
To lock in the entire capital structure, Silverstein also bought the property’s senior debt, a $424M mortgage originally provided by Otéra Capital, earlier this year. A spokesperson for Silverstein told Bisnow in an email that the junior, senior and mezzanine loans for 9 DeKalb are all in default and that Silverstein is enforcing its rights as a lender, i.e., the Eye of Sauron is about to have a new master.
The mezz loan was the first debt handed out by Silverstein Capital Partners, which was launched in 2018. It has raised over $4B since then and provided debt to projects like Hudson Cos.' One Clinton condo and retail development in Brooklyn Heights.
JDS, led by Michael Stern, tried to sell the 398-unit rental portion of 9 DeKalb, which also features 143 condos, a little over a year ago, The Real Deal reported. At the time, JDS was reportedly seeking between $600M and $700M for the rental units. Judging by today's news, they weren't successful.
Construction on the tower, which sits atop the historic Dime Savings Bank and Junior's restaurant, began in 2015. The property, which is Brooklyn’s first supertall at just over 1,000 feet, also contains a 130K SF retail portion largely occupied by Life Time Fitness. Unit 72A this week set the record for Brooklyn’s priciest studio apartment when it sold for $905K, 6sqft reported.
