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Luxury Developer JDS Faces Foreclosure on Record-Breaking Tower

Defining the future of real estate

Author

Holly Dutton
April 03, 2024

Propmodo Daily

By Holly Dutton · Apr. 3, 2024

Greetings!

Luxury developer JDS Development Group, known for its ambitious skyscrapers in Miami and New York City, is facing a significant financial setback. Their most hyped project, the record-breaking Brooklyn Tower, is now in foreclosure proceedings after JDS defaulted on a major loan. Amidst lawsuits and a shifting real estate market, today’s email explores the company's future and uncertainty around it’s other projects.

Plus, this week Propmodo Technology explores capital project management with our sponsor, Nuveen Green Capital. We’re looking at how technology is changing commercial construction expense management, the role of green loans in funding clean energy initiatives, and the growing acceptance of C-PACE financing.

Now, let's dig in!

Luxury Developer JDS Faces Foreclosure on Record-Breaking Tower

JDS Development Group, a Miami-based developer known for its towering residential skyscrapers, has suffered a recent setback. The firm, which has projects in Manhattan's Billionaire's Row, Downtown Brooklyn, and upscale Miami neighborhoods, is known for its luxurious properties and their steep price tags. Last week, JDS defaulted on a mezzanine loan for its most ambitious project: The Brooklyn Tower, a 92-story building and the tallest in the borough. Despite its hype and nicknames like "Eye of Sauron," the highly anticipated skyscraper now faces foreclosure. With a planned tower in Miami still in the works, this default raises questions about the company's future.

JDS secured $664 million in financing for The Brooklyn Tower (also known as 9 DeKalb) in 2019. Residents began moving in earlier this year as the project nears completion. Prices are notably high – a studio apartment recently sold for $905,000, a record for Brooklyn on a price-per-square-foot basis. However, JDS defaulted on its $240 million mezzanine loan from Silverstein Capital Partners, putting the building's ownership in jeopardy. A UCC foreclosure auction is scheduled for June 10th. Silverstein also bought the senior debt on the property, and reports indicate that the junior and senior loans for 9 DeKalb are now in default. JDS faces additional challenges, including a lawsuit from a charter flight company claiming unpaid debts exceeding $1.2 million.

This default isn't an isolated event in the current real estate market, and it likely won't be the last. JDS founder and CEO Michael Stern launched the privately held company in 2002, focusing on ambitious projects. Self-described as "Skyline Disruptors" and "Risk Takers," they've consistently built large-scale skyscrapers. JDS thrived for two decades in the era of low interest rates and abundant financing. Despite the recent market shifts, luxury residential real estate in Miami and New York remains in demand. While units at The Brooklyn Tower have been selling since 2022, the property has not yet sold out entirely. JDS has been silent about the default and sales figures, but it wouldn't be surprising if the company pauses future developments until its current issues are resolved.

Insider Insights

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✂️ WeStructuring: Embattled co-working space provider WeWork says it expects to emerge from bankruptcy by the end of May, touting lease-restructuring efforts that it estimates will bring $8 billion in future rental savings. The company says it has “determined a final path forward” for 90% of its 500 or so wholly owned locations.

Overheard

Propmodo Technology: Capital Projects Management

Once Considered Niche Financing, C-PACE Is Being Embraced by the Mainstream 

C-PACE (Commercial Property Assessed Clean Energy) is a rapidly growing financing solution for commercial real estate projects. This innovative mechanism allows owners and developers to fund energy efficiency, water conservation, and resiliency upgrades with low-cost, long-term, and flexible financing. C-PACE is available in 38 states and Washington D.C. Due to its cost-effectiveness, alignment with sustainability mandates, and the ability to be used at various project stages, the demand for C-PACE financing is surging within the commercial real estate industry.

READ ONLINE: https://propmodo.com/once-considered-niche-financing-c-pace-is-being-embraced-by-the-mainstream/

How Technology Can Help Fast Track Green Financing

READ ONLINE: https://propmodo.com/how-technology-can-help-fast-track-green-financing/

Technology Is Helping Manage Commercial Construction Costs in Real-Time

READ ONLINE: https://propmodo.com/technology-is-helping-manage-commercial-construction-costs-in-real-time/

More Upcoming Propmodo Technology Deep-Dives:

 🏠️ Multifamily Development
 🏢 Asset & Investment Management
 🪞 Digital Twin
 🛗 Vertical Transportation
 🛍️ Retail Real Estate Analytics

Interested in collaborating on one of these topics to reach over 70,000 commercial real estate professionals? Email [email protected]

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