Among Shaya Prager’s flips in Keith Larsen’s story last week was a real eyebrow-raiser.
Prager bought a Turtle Bay townhouse at 311 East 51st Street for $4.5 million in February 2022 and sold it two months later for $6 million.
How did he get a much higher price in such a short amount of time? According to his spokesperson, Prager “made a significant investment to improve the condition and value of the property.”
But when The Real Deal’s Larsen looked for building permits for the renovations, he didn’t find any. Making a million bucks’ worth of improvements without a permit is a neat trick. (The Department of Buildings told The Daily Dirt that it received no complaints of unauthorized work.)
What Larsen did find is that the buyer, Kim Cartagena, had been involved with Prager properties before. Larsen also found that the title company on the Turtle Bay sale was Riverside Abstract, which was later blacklisted by Fannie Mae for its involvement in fraudulent real estate deals.
So the flip of 311 East 51st featured people who knew each other on both sides of the transaction, a scandal-plagued title company, and substantial renovations. But no building permits.
As if that were not enough to raise suspicions, Cartagena turned the building into an illegal short-term rental operation, according to the city’s Office of Special Enforcement. A Dec. 23, 2022, inspection resulted in violations for illegal use, not for illegal alterations or unpermitted construction. Cartagena and her brokerage paid $845,000 to settle the allegations.
StreetEasy shows 10 different units listed since the start of 2023. Units 1, 1A, 1L, and 1R, all three-bedrooms, were priced at an average of $14,100 a month. Six one-bedroom units were listed for an average of $4,050. The total asking rent for the 10 units was $80,700 — nearly $1 million a year.
However, a real estate agent told TRD that the listings for Units 1, 1A, 1L and 1R are all for the same duplex (which would mean the building has seven units with asking rents totaling $38,400, or $461,000 a year). Make of that what you will.
Today, no units are listed as available.
That was just one Prager transaction highlighted in Larsen’s story. Read the whole piece here.
Prager has not been accused of wrongdoing at 311 East 51st Street. But at others, some lenders have sued, alleging he engineered deals that allowed his entities to borrow more money on properties than they paid for them.
What we’re thinking about: Did Andrew Esposito’s Apex Development — following the standard playbook for rezonings — propose a larger project at the Arrow Linen site than it aims to build, expecting the local Council member to grant a smaller rezoning? Or would it really build as many units as proposed, should the Council member allow the rezoning as proposed? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Of the 10 NYC neighborhoods that gained the most white residents from 2010 to 2020, eight were in Brooklyn: Bed-Stuy West, Williamsburg, Bed-Stuy East, Crown Heights North, Bushwick West, Bushwick East, Downtown/Dumbo/Boerum Hill, and Prospect Lefferts Gardens. But citywide, the white population stayed about the same because of drops in southern Brooklyn, central and eastern Queens, and the northern and eastern Bronx:
Elsewhere…
The housing lottery just launched for the massive multifamily project at 18 India Street, which was initially called 1 Java Street, in Greenpoint. You might recall that it was part of RedSky Capital’s portfolio, which started coming apart even before the pandemic and the spike in interest rates. Lendlease and Australian pension fund Aware Super bought the 2.9-acre site in October 2020 for $110.8 million in cash from JZ Capital Partners and a RedSky entity.
Nationwide, sales of new homes increased 6.7 percent in December from a year earlier. The reason wasn’t a drop in mortgage rates, which were about the same. What, then?
Zillow senior economist Orphe Divounguy said the lack of existing homes on the market drove buyers to new construction. He cited “rate lock” — “existing homeowners refusing to give up their ultra-low pandemic mortgage rates.” But is rate lock any worse now than it was a year ago?
NerdWallet’s Holden Lewis had another explanation for the increase in new-home sales: Homebuilders offered cheaper homes, knowing Americans were struggling to afford high mortgage rates. According to Lewis, 20 percent of new homes sold in December went for less than $300,000, versus only 15 percent in December 2023.
Charles Cohen’s Cohen Brothers Realty lost an arbitration case against the International Union of Operating Engineers at 623 Fifth Avenue, 750 Lexington Avenue, 3 Park Avenue, 475 Park Avenue South, 622 Third Avenue South, 805 Third Avenue and 979 Third Avenue after it stopped making monthly payments to a union benefits fund last July.
The arbitration award, reached Dec. 26, was $216,558, but the firm has yet to pay it, according to a lawsuit spotted by TRD researcher Christian Bautista. As you might have read, the billionaire Cohen has bigger problems on his plate.
Closing time
Residential: The priciest residential sale Tuesday was $15 million for a five-bedroom co-op unit at 920 Fifth Avenue in Lenox Hill. Betsy Messerschmitt of the Corcoran Group had the listing.
Commercial: The most expensive commercial closing of the day was $66 million for a portfolio of 18 properties in Prospect Heights and Park Slope: 216, 237, 239, 241, 243, 266-268, and 234 Flatbush Avenue; 452-454 Dean Street; and 458, 462, 464, 466, 468, 470, 472, 474, 478, and 480 Bergen Street. The Real Deal reported on the sale by the Pintchik family to the Ostad family.
New to the Market: The highest price for a residential property hitting the market was $14.45 million for a 7,185-square-foot condominium at 45 Walker Street in TriBeCa. Chris Poore and Eyal Dagan of Sotheby’s International Realty have the listing.
Breaking Ground: The largest new building application filed was for a 31,755-square-foot, eight-story, 53-unit project at 1376 Inwood Avenue in Highbridge. Lester Katz Architecture filed the permit on behalf of Shaya Seidenfeld of MZS Realty.
— Matthew Elo