Two Trees has completed a $185 million acquisition of the Domino Sugar Factory, an 11-acre parcel on the Brooklyn Waterfront where the development firm plans to build potentially billions of dollars worth of residential apartments.
The site had been at the center of a months-long legal dispute between its two previous owners, CPC Resources and the Katan Group, in which Katan had tried to block the sale to Two Trees on claims it had received higher offers from other buyers, including the investor Joe Chetrit.
Katan and CPCR bought the site in 2006 for $55 million with plans to build a group of high-rise residential towers that would feature a significant component of affordable housing. But by last year, the partnership was in default on over $125 million it had borrowed in connection with the project and Katan filed suit against CPCR alleging the company had accomplished little in accruing the massive debt and had mismanaged the project.
After arranging to hand the Domino site to its lender Pacific Coast Capital Partners in a deal that would have valued the site at around $140 million, CPCR reached an agreement with Two Trees in June to sell it for $160 million. Eventually Two Trees raised its offer to $185 million after Katan claimed it had better bids from other interested buyers that reached in excess of $200 million.
Katan attempted to block the sale to Two Trees, winning a temporary injunction against the sale in late September. That decision, Katan’s final legal option in opposing the deal, was overthrown last week by a state Appellate Court, paving the way for Two Trees to close on the site, which features the derelict remnants of what was once one of the world’s largest sugar refineries.
“The sale of Domino heralds a stronger, more viable CPC, strengthening our ability to focus on our core mission of providing much needed capital for affordable housing across New York City and State,” Rafael Cestero, the president and CEO of the Community Preservation Corporation said in a statement released by the organization. “Two Trees has a track record in developing and revitalizing communities, and this deal is an excellent opportunity for Domino to become the vibrant, mixed-income waterfront community we envision it to be.”
Katan’s lawyers have hinted that the company may opt to sue CPCR for the lost proceeds it would have been able to net from selling to one of the buyers it claims would have extended substantially more for the factory site.