Silverstein Offers to Buy Part of All Year’s Denizen Bushwick for $200M
Silverstein Properties has made an offer on one half of Denizen, a massive, multifamily development in Bushwick, Brooklyn, owned by the troubled All Year Management, according to documents filed on the Tel Aviv Stock Exchange.
Earlier this week, All Year filed for bankruptcy on the second phase of the same project, which is facing default on both the senior and mezzanine debt on the property. Together, the two phases of the development, at 54 Noll Street and 123 Melrose Street, comprise 911 units.
Silverstein will purchase the 443-unit Noll property for a total of $170 million while its subsidiary, Silverstein Properties Ltd., will issue $30 million in bonds on the Tel Aviv Stock Exchange, per the proposal. Silverstein will also inject $5 million in cash into the asset for portfolio restructuring or other immediate needs. The offer was first reported by The Real Deal.
The acquisition would pay down the senior loan on the Noll property, a $168 million mortgage financed by bondholders in Israel.
One complicating factor is that, in addition to the fact that the property is backed by secured bonds, it is part of All Year’s corporate portfolio that issued bonds in Israel and is, therefore, entangled in the company’s broader troubles.
In addition to the Melrose bankruptcy, All Year is facing an array of defaults across its portfolio and claims from creditors, bondholders, and partners. The Melrose bankruptcy was designed to stave off a Uniform Commercial Code foreclosure, scheduled for the afternoon the bankruptcy was filed, on a $65 million mezzanine from Mack Real Estate.
All Year has also received additional offers for its entire portfolio, including one from Meadow Partners and Madison Capital. The Silverstein deal would preempt those discussions, as it stipulates a 60-day exclusivity period, per the proposal.
Any deal would have to be approved by the chief restructuring officer, Joel Biran, who is also serving as All Year’s CEO at the behest of the bondholders.
The pricing will represent a 22 percent loss to Series E bondholders, whose bonds are secured by the first mortgage on the property, as those bonds were initially worth $257 million, according to the Calcalist. The loss could be slightly smaller, because Silverstein structured the proposed $30 million bond, so that there’s some upside to bondholders if the property is later sold for more than $220 million. Nevertheless, given the state of All Year, it’s potentially the best deal bondholders could hope for.