Dermot Co. buys 302-unit Midwood rental for $180M, adds to 3000-unit-plus city portfolio

The Dermot Company has purchased Hampshire Properties’ 302-unit Vitograph residential apartment building at 1277 East 14th Street in Midwood, Brooklyn for $180 million. The acquisition adds to a portfolio of at least 3,038 units that Dermot owns in the city.

According to public records, Dermot and Hampshire closed the deal on March 23, 2022 and it was recorded on April 6, 2022. The property has 382,162 square feet of built space according to PincusCo analysis of city data.

Thomas Rosenthal, the founder, president and CEO of Hampshire Properties was the signatory on the deed through the entity 1277 Holdings LLC. Andrew Levison, partner and managing director of the Dermot Company signed through the entity The Vitagraph Reit, LLC.

Demot Company added $15.9 million of debt against the property with an acquisition loan from Signature Bank for a total of $108 million of debt. This replaces the previous $92.1 million loan from MF1. Gregory Fantauzzi was the signatory for Signature Bank. David Haley signed on the mortgage transfer for CBRE as special servicer on behalf of MF1.

The apartment building, which opened in 2019 has 302 units and is located at the former Vitagraph Studios site which was a production company famous for its silent films.

The sale price per built square foot is $471 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

Hampshire Properties bought the property on July 25, 2014, for $20 million.

Dermot Company and Hampshire Properties did not immediately respond to a PincusCo request for comment.

Prior sales and revenue

The former owners according to the Department of Housing Preservation and Development includes Thomas Rosenthal, head officer and Daniel Rosenthal, site manager. The business entity is 1277 Holdings Llc. The 382,162-square-foot property generated revenue of $10.2 million or $27 per square foot, according to the most recent income and expense figures.

The property

The 1277 East 14th Street parcel has frontage of 347 feet and is 207 feet deep with a total lot size of 71,875 square feet. The lot is irregular. The zoning is R7A which allows for up to 4 times floor area ratio (FAR) for residential with inclusionary housing. The property has a 421A exemption that started in 2020 and expires in 2055. The city-designated market value for the property in 2022 is $54 million. The most recent loan totaled $92.1 million and was provided by Berkshire Group on September 16, 2020.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has received one DOB violation and $750 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on September 23, 2019. There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Midwood, the bulk, or 44 percent of the 44.6 million square feet of commercial built space are 1-4 family buildings, with residential elevator buildings next occupying 34 percent of the space. In sales, Midwood has had very little sales volume relative to other neighborhoods with $141.4 million in sales volume in the last two years. For development, Midwood has had very little major development activity relative to other neighborhoods.It had 335,909 square feet of commercial and multi-family construction under development in the last two years, which represents 0.75 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the eight commercial properties representing 410,142 square feet of the 442,682 square feet. The largest owner is Hampshire Properties, followed by Keith D. Kantrowitz and then City of New York. There are no active new building construction projects on this tax block.

The majority, or 86 percent of the 442,682 square feet of built space are residential elevator buildings, with office buildings next occupying 11 percent of the space.

Surrounding

Within a 400-foot radius of 1277 East 14th Street, PincusCo identified two commercial real estate items of interests occurred over the past 24 months.
One of those two items was a sale which FBE Limited bought the 0-square-foot industrial (G7) on 1238 East 14th Street and one other property for $18.1 million from Edward Farbenblum on February 27, 2020.
One of those two items was a loan which Keith D. Kantrowitz borrowed $7 million from JPMorgan Chase secured by the 27,980-square-foot, four-unit office building (O5) on 1523 Avenue M on October 7, 2021.

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