Real Estate
Brooklyn Tower auction postponed amid settlement talks over $240M loan default with Silverstein Properties.
Judgment day for Michael Stern’s Brooklyn Tower was averted at the last moment as the scheduled auction for 9 DeKalb Avenue was called off. The auction, set for Monday morning, was halted due to ongoing settlement talks between Stern’s JDS Development and lender Silverstein Properties. This development is the latest twist in the ongoing saga surrounding the Downtown Brooklyn property, which has faced numerous challenges since its inception.
Stern’s JDS and Joseph Chetrit’s Chetrit Group initially purchased the lot in 2014, followed by the acquisition of the Dime Savings Bank building for $90 million in 2015. Stern later bought out Chetrit’s stake for $60 million in 2018, taking full control of the project. The 1,067-foot tower, which includes 130,000 square feet of retail space, 417 rental units, and 143 residential condominiums, was projected for completion in 2022. However, financial difficulties arose when Stern defaulted on a $240 million mezzanine loan in March, leading Silverstein to initiate a UCC foreclosure.
The postponement of the Brooklyn Tower auction is emblematic of broader trends in the real estate market, where financial distress and foreclosures are becoming increasingly common. Similar scenarios are unfolding across the industry, as seen with Aby Rosen’s RFR Holding and Charles Cohen’s Cohen Brothers Realty. Both firms are grappling with significant financial challenges, including defaults on substantial loans and impending foreclosures. These cases highlight the precarious nature of high-stakes real estate investments, particularly in a volatile economic environment.
The ongoing struggles of developers like Stern, Rosen, and Cohen underscore the complexities of navigating the real estate market. Rising interest rates, financial mismanagement, and market fluctuations have contributed to a wave of defaults and foreclosures. For instance, RFR Holding has faced multiple defaults, including a $224 million mortgage on 522 Fifth Avenue and an $80 million mortgage on a Gowanus development site. Similarly, Cohen Brothers Realty managed to temporarily halt a $534 million foreclosure by Fortress Investment Group, but the long-term outcome remains uncertain.