Monday, March 30, 2015

James McGown's Pre-Foreclosure Real Estate Auction Of Several Properties In The Neighborhood "Did Not Go As Well As Planned"

320 Court Street in Carroll Gardens

I received several reports regarding restaurateur James McGown's pre-forclosure auction of several properties in Carroll Gardens and Gowanus, which was held this past Friday. March 27th, at the
Brooklyn Marriott Hotel.

According to one source, about 80 people attended the auction, which was conducted by East River Mortgage Corp., a defunct corporation owned by McGown, which filed for Chapter 11 in 2012.

Among the properties up for auction was 320 Court Street, the building currently housing the gastro-pub Buschenschank, an illegal private events space in the basement, and soon, a floatation therapy business on the second floor.
Though McGown had valued the building at $9.4 million, it was 'only' bid up to $3.8 million at Friday's auction.

Another source reported that several of the lots being auctioned off didn’t get any offers, "so the auctioneer said he’d come back to them at the end. Others were going for $1.2 million to - $1.5 million."
The long neglected buildings at 555 Union Street and 557 Union Street, received bids from the same buyer for $1.2 million each.

Obviously, McGown was disappointed with the results. Shortly after Friday's auction, he made the following announcement via email:
The auction did not go as well as planned. Several properties did not have offers sufficient to cover lien amounts so we could not accept them. Other bidders failed to produce down payment checks after bidding on the properties. As a result we are reconsidering the sale process.
We are currently offering the following properties for sale:
1511 Pacific St for $160,000 or best offer.
557 Union Street--$2M
555 Union St--$2M

The term of sale for the properties stipulated that the owner reserves the right to cancel any of the sales, so he does not need to accept any of the bids.

None of this probably comes as a surprise to those who have had dealings with McGown in the past. After all, he has become notorious for his questionable business practices, string of bankruptcy filings, and dilapidated buildings, which has earned him the nickname "bankruptcy baron" in the press.

It will be interesting to see what happens next.

555 Union Street and 557 Union Street in Gowanus were offered at the auction,
but the bid was not accepted.
(photo credit:


Anonymous said...

I guess I'm not understanding - regardless of what buyers may think of him being unscrupulous, the properties do have value. I don't think buyers would care if they like the seller or not. These seem like they would be valuable properties. The only thing I can imagine is that if they believe he would be problematic to buy from or if the properties are saddled with liens and other baggage that is not factored into the price.

Katia said...

I think a bid of $3.8 million dollars for the building at 320 Court Street, with all its Buildings department violations that need to be resolved, seems appropriate. I don't think that McGown's estimated value of $9.4 million was realistic.

As for the buildings on Union Street, they have been border up for at least a decade. Again, i think that $2million for each is a bit steep.

Anonymous said...

2M each for the union street properties isn't steep when you consider that they're tear downs that will be bought by a developer - not an end user.

the Court Street building does have it's flaws - violations up the wazoo. It depends on how ironclad the current leases are and how much income they produce. 3.8M seems a bit low to be for a large mixed use space on a street with heavy foot traffic. Even crappy mixed use building in Park Slope and Gowanus are asking at least 5M for smaller spaces.

Anonymous said...

You also have to get to closing. The conditions set forth in the contract that was posted on this blog earlier do seem to heavily favor the seller. Those who might put down a deposit may never see that money again.

Anonymous said...

I see that 320 Court Street seems to be in contract to be sold as of a week or so ago.

Katia said...

Aha. Does it say for what price?

Anonymous said...

Realtors never say what the accepted offer price is. It was originally listed at $7.2M and was dropped to $6.85M April 1st.
The contract was signed April 22nd.
But…. as we all know…. anything to do with Mr. McGown can be complex and not exactly what it appears to be.

Katia said...

That is true. McGown has been a very interesting character in the neighborhood.

Anonymous said...

I see the listing now says Back On The Market. Not surprised considering how many outstanding DOB violations there are on the building. There is at least $10k to $20k in unpaid fines currently.

Anonymous said...

It looks as if Buschenschank may be done / closed.