The Collective Avoids Foreclosure With $54M Sale of Williamsburg Site
By Celia Young January 28, 2022 1:50 pm
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Co-living firm The Collective — which went bankrupt last summer due to the pandemic — has sold its 330,000-buildable-square-foot development site at 555 Broadway in Williamsburg, Brooklyn for $54 million, avoiding a lender foreclosing on the property’s mortgage.
While the co-living company managed to pay off some of its debt, it sold the vacant lot for far less than the $450 million for which it bought the property in 2018.
The buyers — a joint venture of The Loketch Group, The Joyland Group and Meral Property Group — plan to build a mixed-use rental project on the site with 250,000 square feet of residential space under the Affordable New York Program, which provides a tax incentive that lets developers pay little to no property taxes on a development that includes some affordable housing.
“This is a transit-oriented site that enables us to accommodate strong demand for superior-quality rental apartments in Williamsburg,” Pinny Loketch, founder and principal of The Loketch Group, said in a statement.
U.K.-based The Collective used the off-market sale to pay off its $49 million of mortgage debt on the property, The Real Deal first reported. Its lender, the Kalikow family’s Gamma Real Estate, was ready to foreclose on the property, having scheduled an auction for the land next month. FTI Consulting was appointed administrators of the company’s U.K. bankruptcy in 2021, as The Collective’s lenders looked to sell off the firm’s U.S. assets, All Work reported.
Both the foreclosure and potential changes to the Affordable New York Program, known as 421a, made it imperative to get things done quickly, TRD reported. Gov. Kathy Hochul proposed slight changes to the affordable housing program, which will apply to the development unless the joint venture lays the foundation for the new building before the current 421a tax abatement expires on June 15.
The new ownership group will get to work immediately on laying the foundation, and will not assume any debt on the property, JLL (JLL)’s Ethan Stanton, part of the team representing the buyers and the seller, told Commercial Observer. The buyers are seeking a construction loan to get started.
“555 Broadway offers not only scale but a clear pathway to build under the Affordable New York Program, which is why we were able to execute this entire transaction in less than 60 days,” Stanton said in a statement.
The Collective first revealed plans to build its 500-unit New York City flagship at 555 Broadway in 2018, but the firm’s occupancy rate shrank during the pandemic and it faced bankruptcy in Britain, CO reported.
Alongside Stanton, JLL’s Brendan Maddigan, Stephen Palmese, Ethan Stanton, Michael Mazzara and Winfield Clifford represented the seller and the buyer in the deal.
Celia Young can be reached at cyoung@commercialobserver.com.
