Big Deal
A major New York portfolio hits the market.
Two New York portfolios just grew by 11,000 apartment units–overnight.
In October, the MetLife affiliate Metropolitan Tower Life Insurance Co. sold Peter Cooper Village and Stuyvesant Town in New York to two local firms– Tishman Speyer, a real estate owner, developer, and investor, and BlackRock Realty, the real estate arm of BlackRock–for a staggering $5.4 billion. It’s believed to be the largest real estate transaction in U.S. history.
The complex extends across 80 contiguous acres with 110 buildings containing 11,232 apartment units. The property is located between Midtown and Downtown Manhattan on the East River and extends north to south 10 city blocks. It has 2,260 enclosed parking spaces in six garages and more than 111,000 square feet of retail space.
“It’s big,” says Dan Fasulo, director of market analysis for Real Capital Analytics, a New York based firm that tracks apartment sales. “It’s certainly an offering that doesn’t come around very often. It’s very unique.”
Before the transaction, speculators wondered how the complex would be priced, considering its enormous size and a lack of comparable sales. Another pre-sale concern was the rent-controlled units–almost 75 percent of the total–on the site. Some housing advocates were worried these may go away after the sale. In official statement about the purchase, though, Tishman Speyer says that won’t happen. But that also means returns for the new buyers could be very low in the beginning.
“They are going to have to have an enormous amount of patience and take a very long-term view of the asset in terms of making reasonable amount of return on their investment,” says Seth Weinstein, principle at Hannah Real Estate Investors, a real estate investment and development corporation based in New York and Stamford, Conn.
“Tishman Speyer is one of the best operators in Manhattan … and BlackRock is a very deep-pocketed investment group,” Weinstein says. “They will work as hard they can to optimize the value of the investment. These are quality players who buy high-end, high-profile properties and hold it for a long a time.”
–Les Shaver
Head of the Class
Class B product is making an upward move in two Southern markets: Atlanta and Charlotte, N.C. Occupancy in Atlanta’s 1980s-era apartment stock has shot to 95 percent, up nearly five percentage points from the low point in 2002, according to M/PF YieldStar. Similarly in Charlotte, occupancy in 1980s communities has climbed more than four points since late ’02 to reach 94.4 percent.
–Rachel Z. Azoff
New Deal
JPI, an apartment, owner, manager, and developer based in Irving, Texas, scored a big coup when it won property management and accounting services contracts for 59 properties from RREEF North America, a property owner based in San Francisco. JPI is not assuming interest in any of the properties and will manage the RREEF employees.
–Les Shaver
Racial Tension
The National Fair Housing Alliance has filed an administrative housing discrimination complaint with HUD against Coldwell Banker Residential’s office in Chicago’s Gold Coast and its parent company NRT. The alliance claims that real estate agents blatantly steered home buyers by race and denied basic services to African Americans. The alliance discovered the alleged discrimination during its multi-year, twelve-city project to test for housing discrimination in real estate sales and rental markets.
–Rachel Z. Azoff
Young Voices
Want to find out what echo boomers really want? Just ask them. This past summer, The Lane Co. learned about this young renter cohort through the eyes of college interns. Armed with cameras, the interns took photos of what they loved and hated about Lane’s rental properties. Their likes: green space, group seating in outdoor areas, concierge services, locations near restaurants and stores, recycled products, and secure garage parking. And some dislikes: small closets, large bathtubs, lack of guest parking, and small workout rooms. Lane plans to incorporate some of these suggestions at future properties. –Rachel Z. Azoff
Branching Out
The Picerne Group, a private real estate firm based in San Juan Capistrano, Calif., acquired Crown Pacific Properties, a real estate investment company in Carlsbad, Calif., to form TPG Apartment Group. TPG will focus on investments in the Western United States in markets like Seattle, Denver, Phoenix, Dallas, Austin, San Francisco, Los Angeles, and San Diego.
–Les Shaver
Mark Your Calendar
Make a note in your datebook today for the 2007 Multifamily Executive Conference, which will be held Oct. 2-4, 2007, at The Venetian in Las Vegas. See you there!