$13.5 Million, a Landmarked Church and Five Years of Nothing: A Brooklyn Church Conversion Ends in Bankruptcy

• The former St Luke’s Evangelical Lutheran Church at 257 Washington Avenue closed in 2014
• Developer Serabjit Singh Malhotra bought it for $13.5 million in 2019
• Valley National Bank lent $15.1 million and began foreclosure in August 2022
• The landmarked building is still boarded up, and its owner has filed for bankruptcy

When St Luke’s Evangelical Lutheran Church in Clinton Hill, Brooklyn, closed its doors in 2014, its building at 257 Washington Avenue became a prize for developers. A decade later, it has defeated two of them. The Real Deal reported in May 2024 that the second owner, Serabjit Singh Malhotra, had filed for bankruptcy protection five years after buying the property.

Malhotra paid $13.5 million for the site in 2019, buying it from Brookland Capital, the first developer to try to turn the church into homes. That same year he took out three loans from Valley National Bank totalling $15.1 million. He began converting the property into residential units, but the work stalled.

The bank started foreclosure proceedings in August 2022. It said loans that fell due in June 2022 had not been repaid, that hazard insurance on the property had lapsed in May 2021, and that property taxes had gone unpaid from 2020 to 2022. The developer’s attorney, Gregg Star, said Malhotra “could not repay the loan because the pandemic paused construction and prevented Singh from collecting rent on his other properties.”

The building’s landmark status added to the difficulty. City records show four Department of Buildings permit applications filed since 2014, only one of which was approved. Three were disapproved in 2022, including requests to convert a school building on the lot into a seven-family dwelling. The church itself remains boarded up.

The story is a warning about what can happen after a congregation sells. The church may get a good price, but a historic building on a tight urban lot is expensive and slow to convert, and heavily borrowed developers can run out of road. The neighbourhood ends up with an empty shell rather than new homes or a place of worship.

Brooklyn is home to one of the largest Jamaican communities outside the island, and many of its congregations own ageing buildings that developers want. For church boards there and in Jamaica, the lesson is to look hard at who is buying, how the deal is financed and what protections exist if the project fails. Selling to the highest bidder is not always the same as securing the building’s future.

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