Paramount Realty to auction six properties

Paramount Realty USA will auction six properties, once collectively valued at $50 million. All of the properties will be auctioned next month in June in a commercial auction event. The properties include three stalled condo developments (two in Brooklyn, one in Harlem), a large mixed-use development site in Brooklyn, a building in East Harlem, and an office building in Long Island. "This auction is rare because it consists of the largest group of distressed commercial properties in size and scope to be auctioned by private owners in N.Y.C. in 10 to 20 years," said Misha Haghani, a principal at Paramount Realty USA, the company hired by a cadre of developers and owners to auction the diverse package of distressed properties. "Half of the properties do not have any bank debt and most represent great development or re-development opportunities." Consistent with an apparently rising trend in this region, Haghani said, "Several unrelated groups of partnerships have independently opted to monetize their real estate via auction, and each ownership group has their own reason for proceeding with the auction." The largest is a development site, with foundation in place for both the superstructure and an automated parking system for up to 130 vehicles that can enter from either side of the property, which faces the ocean on the fringe of Brighton beach. The owners, a consortium of partners led by American Development Group's Perry Finkelman, put $22 million into the property at 271-275 Sea Breeze Ave. and planned to develop a 151,000 s/f, 22-story condominium project. Finkelman said, "The Sea Breeze project is on the cusp of Brighton beach with unobstructed views of the water and is one of the last open areas that a developer can have a significant impact on. The project is suited for a host of development combinations, including senior residential living, particularly due to the location of the site directly within the Russian community. It is ideal for many who wish to stay within the community and have one of the finest locations with water views." The partnership decided to hold off further construction past the foundation due to the uncertainty of the real estate and credit markets. "The development team is currently building projects elsewhere in Brooklyn and Manhattan and the partnership here has concluded to sell the property and move on, creating the opportunity for another developer to complete the project," said Haghani. The other stalled Brooklyn condominium development is located at 393 Lefferts Ave. in Crown Heights. When the original developer went into foreclosure, the current owners, 393 Lefferts Ave LLC, purchased the note from the bank, and subsequently took control of the property, which appraised in an as-is condition for $9.9 million in 2007. As part of a partnership dissolution, the current owners are proceeding with an auction to sell the project, which was originally planned to be a 61,085 s/f, 33-unit condominium development. "The property will likely be sold at a discount to the appraised value," said Haghani, "creating an extraordinary investment opportunity for buyers." The third Brooklyn property that will be auctioned is a mixed-use, 86,000 buildable s/f development site located at 2554 East 16th St. in Sheepshead Bay, Brooklyn. The sale is the product of a partnership dissolution whereby, subsequent to considerable litigation, one partner obtained a court order authorizing him to sell the property on behalf of the partnership. The owners had obtained plans to build a property consisting of 30 residential units, over 5,000 s/f of retail space, over 23,300 s/f of office space, nearly 10,000 s/f of community healthcare facilities and 186 parking spaces. "The property traded in 2004—a market similar to today's in terms of pricing—for over $7.5 million," said Haghani, "and could potentially sell for less than that in this auction." "We have not seen this caliber of commercial properties go to auction by private owners in New York City to date," said Haghani. "There is tremendous opportunity for buyers to purchase great property at a great price. Savvy investors can take advantage of the distress in the market at this rare buying event." All three properties, 271-275 Sea Breeze Ave., 393 Lefferts Ave., and 2554 East 16th St. will be offered in a Sealed Bid Auction with a deadline of June 9. Prospective purchasers must submit signed offers, along with certified funds equal to 10% of their bids, to Paramount Realty USA by the bid deadline. In addition, Paramount Realty USA has been hired to conduct Open Outcry Auctions for 3 other individual commercial properties at 6 p.m. on June 15 at the Roosevelt Hotel (located at 45 East 45th St. in Manhattan). East Harlem * The developers of the stalled residential development located at 2264 Second Ave. at 116th St. had plans to build a 17,433 s/f residential building. Construction stopped after two stories of reinforced concrete were erected. This property, planned as a nine-story building with 17 units, can be completed as either a condominium development or a rental building. The suggested opening bid for this property is $799,000, or just $54 per buildable s/f. * The property at 2027 First Ave. (between 104th and 105th Sts.) is 14,100 s/f and was built as eight condominium units. The entire building was then triple-net leased to an operator at $300,000 per year and there are 19 years remaining on the 20-year lease. The suggested opening bid for this property is $1.9 million, equivalent to a cap rate of 16% based on the actual, existing income. Long Island * Office Property: The sellers of this office building a 175 Roslyn Rd. in Roslyn Heights on the gold coast of Long Island first purchased the note on the property from a local bank in 2009. They subsequently gained control of the real estate as well and now seek to sell this 8,661 s/f vacant office building—an opportunity for an investor or business owner. The suggested opening bid for this property is just $699,000.