Watermark's Crown Heights loan leans on a parish that nearly closed

The $16.48 million construction loan from California-based Genesis Capital, arriving alongside Tuesday's leasehold memorandum, puts a financially strained parish inside the underwriting of a 42-unit school conversion. Site plans Watermark Capital Group filed with the Department of Buildings on Thursday show the job at 783 Classon Avenue, which shares a tax lot with 560 Sterling Place, running 42,181 square feet of residential space against 57,449 of community facility. By floor area, the apartments are the smaller half.

Watermark does not own the land underneath it. Through the entity 560 Sterling, the developer holds a ground lease from St. Teresa of Avila Roman Catholic Church, the parish next door whose campus the site adjoins; the memorandum of lease references an initial lease signed in April 2024 and modified in June 2025. The filing arrived alongside the Genesis Capital loan, with Watermark founding partner Wolfe Landau signing for the developer on both the memorandum and the loan agreement.

The landlord spent last summer debating its own future, and the campus—spanning Classon Avenue between Sterling Place and St. Johns Place—once housed Brooklyn Jesuit Prep Middle School before the school relocated to East Flatbush in 2020, leaving the remaining buildings leased to the New York State Court Officers Academy at 541 St. Johns Place. In June 2025, parish leaders announced the church at 563 Sterling Place would close, citing financial strain, declining participation, and a deferred repair bill in the millions, then reversed that decision while acknowledging the challenges would persist.

A construction lender secured by a leasehold is underwriting a contract, and this contract's counterparty is a parish that spent last summer contemplating its own closure. The reversal matters, and nothing in the filings suggests a landlord in retreat, but the parish's own account of its position includes financial strain, declining participation, and a repair bill in the millions—those are the items a ground-lease credit now carries. Buyers across apartment capital are underwriting operations rather than rent growth, and here a share of the operation belongs to a landlord the developer does not control.

The $16.48 million loan works out to roughly $165 per filed square foot of the program, and the majority of that area is community facility space—57,449 square feet that will need an institutional tenant on a campus where a state agency already pays rent. Whoever signs for that floor area will have more to do with how this leasehold performs than any of the 42 apartments.