Published: May 1, 2007
Tags: Real Estate
In one of the largest residential portfolio sales in city history, Urban American Management and City Investment Fund have purchased a series of buildings in Harlem and one on Roosevelt Island for $940 million, according to two sources.
The purchase includes nearly 4,000 apartments in a deal that is loaded with implications for proponents of affordable housing and landlords with an eye for high-rise housing.
The apartment buildings sold were formerly part of the Mitchell-Lama program, the 52-year-old state affordable-housing initiative. The portfolio sale is the second-biggest residential one ever in Manhattan, according to the research firm Real Capital Analytics.
With the sale, this portfolio has gone the way of Stuyvesant Town and Peter Cooper Village, the high-rise affordable rentals that sold for $5.4 billion last year to a private landlord looking to drive up rents.
The buyer of this portfolio is listed in city records as Putnam Holding Company L.L.C., with an address listed back to Urban American Management’s address in West New York, N.J. Three sources confirmed that Urban American was the buyer, along with its financial partner City Investment Fund, which is co-sponsored by the Fisher Brothers and the Morgan Stanley Real Estate Fund.
The seller of all the properties is listed in city records as Cammeby’s International, a company owned by the very quiet and very active landlord, Ruby Schron. Jerome Belson Associates also has a controlling interest in the buildings, according to The Real Deal magazine. Each building, one by one, has been taken off the Mitchell-Lama program with the intention of hiking up rents and making the portfolio look more attractive to potential bidders.
So, the prices! According to city records, two buildings—one at 1890 Lexington and one at 1990 Lexington—sold together for $99.7 million. The apartment building at 1890 Lexington is between 117th and 118th streets, and the building at 1990 Lexington is just off 122nd Street. Two other buildings—one at 455 East 102nd Street and the other at 1940 First Avenue—sold together for more than $187 million. The buildings are within two blocks of each other and are near the F.D.R. Drive.
The biggest building, the 35-story 3333 Broadway, sold for nearly $280 million, with two separate sale prices in city records, with one for $158 million and the other for $119 million. The massive tower has been the clearest symbol of the city’s loss of affordable housing, with Mr. Schron taking the building out of the Mitchell-Lama program shortly after Lee Bollinger announced his plans for an expanded Columbia University campus uptown.
The only building that’s not uptown, 510 Main Street on Roosevelt Island, sold for $189.5 million. And 1307 Fifth Avenue, a building at the corner of 110th Street, at the north end of Central Park, sold for just under $163 million.
Of course, this massive sale is just one of a handful of portfolio deals that have traded in affordable housing lately. The British-based Dawnay, Day Group purchased a series of East Harlem buildings for $225 million in March, and Stephen Siegel’s SG2 Properties purchased a Bronx portfolio for $300 million in February.
The only difference, of course: This $940 million deal sets an even higher benchmark.
THE PREEMINENT WHITE-SHOE LAW FIRM Davis Polk is staying right at home. The firm, which cultivates its reputation as the Cravath, Swaine & Moore for happy people, has signed a massive, 650,000-square-foot renewal at 450 Lexington Avenue, including a 27,000-square-foot expansion; both are for 10 years.
That gives Davis Polk control of floors eight through 13 and 15 through 30. The law firm expanded on the 14th floor.
The 910,000-square-foot building is fully leased, according to CoStar. It is the last office building owned by Istithmar, which is in contract to sell both 230 and 280 Park Avenue.
Lewis Miller and Scott Gottlieb of CB Richard Ellis represented Davis Polk, and Peter Turchin and Christie Harle of CBRE represented Istithmar. CBRE’s Stephen Siegel advised the entire deal.
IN A MARKET WHERE OFFICE RENTS HAVE never been higher, what happens to real estate’s eternal little guy, the nonprofit?
Today, he moves to Harlem.
In a series of deals made uptown, the brokering guru for nonprofits, Suzanne Sunshine, has secured space for three nonprofits in a historic Harlem building at 2090 Adam Clayton Powell Boulevard.
Touro College, Children’s Village and Arbor Education and Training have committed to more than 23,000 square feet in renewals and expansions at Theresa Towers, the former home of the Hotel Theresa, on 125th Street and Seventh Avenue.
To Ms. Sunshine, it’s the implications that matter most: Harlem will be the next Manhattan home for nonprofits.
“As leases turn over, we’re going to make a big push to bring nonprofits up to Harlem,” she said. “Many of my tenants can’t afford more than $28 per square foot. They’ve been battered by this market.”
That’s because nonprofits can’t afford the $64-per-square-foot rents that are the average for top-quality Manhattan office space these days.
After Sept. 11, 2001, nonprofits flocked downtown—but with the downtown market circling back, Ms. Sunshine says Harlem is the place. And if the Harlem revolution is going to start, Ms. Sunshine has identified Theresa Towers as its Bastille.
Before the 13-story building was converted to office space, it used to be a hotel with the moniker the “Waldorf of Harlem.” Fidel Castro once stayed there, and Malcolm X held meetings there. A revolution, indeed!
Originally published in The New York Observer newspaper on 5/06/2007.