Stalled Triangle Sports building across from arena sells for $7 million; any profit tempered by seven years of stasis

The three-story Triangle Sports building at Fifth and Flatbush avenues, across from the Barclays Center, seemed like a prime location to take advantage of arena crowds. Hence its $4.1 million sale price in 2012.

But the awkward shape was not conducive to food-and-beverage service, apparently, and the high price deterred other uses. No wonder, as Brownstoner reported in July 2017, that the owner, RedSky Capital, had apparently commissioned concept drawings showing the building transformed or expanded.

That didn't happen, either. But The Real Deal reported 12/10/19, in RedSky sells building across from Barclays Center as partner liquidates holdings, that Hidrock Properties has bought the building for $7 million and plans "a multi-million dollar renovation."

The future use is unclear.

About that price

The price is  confirmed by the city's ACRIS database; see screenshot below. It seems like a significant profit, based solely on sticker price. 

However, we don't know the interest rate on the financing for that earlier purchase, and the owner had seven years of interest and other carrying costs, with no income. That likely cut significantly into the profit.

Consider: at 10% interest--to pick an arbitrary number--the cost of financing a $4.1 million purchase would eliminate all the profit in a $7 million sale.

Pressure to sell

The Real Deal reported 12/2/19 that RedSky's financial backer, JZ Capital Partners, had been considering writing down the value of the Brooklyn real estate--notably in Williamsburg--it owns with RedSky, but still questioned whether they could get the valuations sought, and was aiming to sell.

The Williamsburg properties were said to have been bought at market peak. Probably the same applies to the Triangle Sports building.

The cost of the company's financing was unclear. The Real Deal 11/27/19 reported:

“They must have access to cheap capital, because they would buy things at prices that I couldn’t make pencil out,” said one competitor.
RedSky found its source of low-cost financing thanks to a personal friendship between Ben Bernstein’s father, Jonathan Bernstein, and JZ Capital co-founder David Zalaznick, sources told TRD.