Property Overview:
Property: A 4-story, approximately 14,700 SF apartment building consisting of 16 residential units. The property is located in the Crown Heights neighborhood, a few blocks north of Eastern Parkway, close to parks, restaurants, public transportation (within walking distance to the Kingston Ave Subway station servicing the 2, 3, 4, and 5 lines), and major Brooklyn attractions.

Loan Overview:

Unpaid Principal Balance (UPB): $550,000
Estimated Acquisition Cost: Approximately $568,000
Market Value: Estimated at $1.50M, trading at below 40% LTV (Loan to Value), offering a low-risk position with multiple exit strategies.

Loan Details:

Origination: By a private lender on May 11, 2023.
Maturity Date: June 1, 2024.
Default Status: The borrower failed to pay, and a Default Letter was issued on June 13, 2024. The loan is currently accruing at the default rate of 24%. The current lender has not commenced foreclosure, which Crimson Equities intends to pursue upon closing.

Borrower Details:

Owners: A 97-year-old man and his 62-year-old daughter reside in the building and occupy two units.
Ownership History: The building has been owned by the family since the early 1970s. Ownership has made significant improvements over the past two years, reducing HPD violations, but the building remains rent-stabilized, making rent increases and capital improvements challenging.

Strategic Actions:

Acquisition Strategy: Crimson Equities is acquiring the loan at a per square foot price of $38.60, significantly lower than the new construction cost of approximately $350 per square foot.
Foreclosure Strategy: Crimson Equities plans to initiate foreclosure proceedings and aims to appoint a receiver to collect rents, which would cover property expenses such as real estate taxes, insurance, and related costs.
Takeaway:
Low-Risk Opportunity: This opportunity, presented directly through the lender, offers a low-risk investment due to the low LTV and multiple exit strategies. Despite the challenges posed by the rent-stabilized status, the low acquisition cost per square foot and the potential for rent collection by a receiver position this as a favorable acquisition for Crimson Equities.

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