The top up-and-coming buyers
Cipriani Club Residences at 55 Wall StreetOver the past two years, companies like SL Green Realty Trust and investor Sam Zell’s Equity Residential have trumpeted their purchases of distressed properties in New York City. Brokers have lauded them as savvy investors who managed to snap up multiple assets from sellers who overreached during the boom.
But there are other companies, such as Irving Langer’s little-known Rainbow Estates Group in Brooklyn and Savanna Partners in Midtown, which have also been on a tear, acquiring properties in Manhattan and the boroughs — often with little fanfare.
This month, using data from real estate tracking firm Real Capital Analytics, The Real Deal ranked the top 20 buyers in New York City between the beginning of 2009 and the middle of last month. The ranking was done by dollar volume and included those buyers that purchased two or more properties. It covered single and portfolio sales over $5 million.
The results offer surprising revelations not just about the buyers, but also about the sellers. For example, SG2 Properties, headed up by Stephen Siegel of CB Richard Ellis fame, quietly sold about half of a 51-building, multifamily portfolio it acquired in the Bronx in 2007, at a steep loss earlier this summer.
Meanwhile, the city’s School Construction Authority was one of the most active buyers in the city, particularly in Manhattan and Queens. The city school system, which is bursting at the seams with students, spent more than $135 million purchasing eight properties since the start of 2009, in a series of acquisitions that garnered little attention.
While there are plenty of well-known players on the top-20 list, The Real Deal zeroed in on the lesser-known buyers and on the deals that you haven’t read about elsewhere. (The descriptions below start with the more under-the-radar purchasers.) And while this list doesn’t include some who shielded their identity, there were plenty of interesting buyers to examine.
Rainbow Estates Group
CBRE’s Stephen SiegelRainbow Estates Group bought more properties (given the criteria used here) than any other individual or company in New York during the last 21 months. Almost all of those properties were picked up in the Flatbush-based firm’s May purchase of 24 Bronx buildings for $117 million.
Rainbow purchased the properties from a joint venture between SG2 Properties, which counts Stephen Siegel, CBRE’s chairman of global brokerage, as a partner; the country’s largest home funding company, Fannie Mae; and investment firm BlackRock Realty.
Rainbow, headed by Brooklyn investors Irving Langer and Leibel Lederman, also closed on one other property this year — a bulk condo purchase from the Related Companies in Brooklyn.
Rainbow paid $117 million for the two dozen properties that SG2, Fannie Mae and BlackRock bought for $145.4 million in 2007, Real Capital Analytics data shows. SG2, a partnership of Siegel and brothers Andrew and Jeffrey Goldberg, bought the apartments as part of a $300 million, 51-building Bronx portfolio. That put the loss in value on the sale at $28.4 million. While the deal looks like a traditional sale in city property records, Siegel told The Real Deal that it was a recapitalization in which Rainbow bought out Fannie Mae and BlackRock, and that SG2 remains a partial owner. The multifamily apartments are mostly six- and seven-story elevator buildings and include the 185-unit building 975 Walton Avenue, built in 1927, and the 70-unit structure at 1212 Grand Concourse, built in 1937.
Meanwhile, in Brooklyn, Rainbow purchased 70 condo units from Related at 63 Tiffany Place in the Columbia Waterfront District, which Related had been operating as a rental property.
Langer is a longtime investor who in August sold a multifamily property in Harlem, 2640 Frederick Douglass Boulevard, for $11.5 million. He and Lederman together own additional apartment buildings, including the 79-unit building 2215 Newkirk Avenue in Brooklyn, and the 107-unit building at 2103 Honeywell Avenue in the Bronx.
Urban American Management
Philip Elsenberg and his son, DouglasOther firms backed by private equity may be drowning with troubled rent-regulated buildings these days, but Urban American Management, based in West New York, N.J., has started to buy again. While competitors like Pinnacle have been selling, Urban American, led by Philip Eisenberg and his son Douglas, have been bargain-hunting, as well as acquiring nonperforming loans and providing needed capital to distressed owners. Using such strategies, the company has purchased five assets for $43.2 million citywide since the beginning of 2009. Three buildings in Upper Manhattan with a total of 200 units, including 50 Overlook Terrace, were purchased from longtime owner Alco Realty for an average cost per unit of $123,000. The other two properties are in Ridgewood and Belle Harbor, Queens, where it spent an average of $125,695 per unit for the 144 apartments.
Founded in 1997, Urban American made one of the city’s largest multifamily purchases ever in 2007, when it paid $918 million for the five-building portfolio of former Mitchell-Lama apartment buildings in Harlem and Roosevelt Island from Cammeby’s International. Urban American owns approximately 15,000 apartment units in the New York area, ranking it as one of the largest private landlords in the city.
The Sabet Group
117 Varick StreetThe Sabet Group, based in Great Neck, L.I., snapped up a package of 10 walk-up apartment buildings for $29 million, located in popular Manhattan neighborhoods such as Chelsea, Greenwich Village, Soho, Gramercy Park and Carnegie Hill. The group of residential buildings has a total of 89 rental apartments as well as eight stores and three commercial units. The largest building in the grouping — a six-story, 25-unit building constructed in 1900 — is located at 120-122 West 25th Street, between Sixth and Seventh avenues. The oldest building was the 11-unit rental at 117 Varick Street in Soho, built in 1870. The average purchase price per unit was $326,000. The company, controlled by investor Alfred Sabetfard, manages residential apartments in Long Island, Philadelphia, Los Angeles and Boston, as well as in New York City, its website says. In Manhattan, the family-owned company, which was started in 1979, also owns properties such as the former Grand Hotel, a landmarked building at 1234 Broadway. The Sabet Group bought it in 2004 for $18.95 million.
New York University
New York University’s Founders HallNew York University has been one of the most aggressive buyers of commercial real estate in Manhattan, although some of the purchases have been based on contracts signed years earlier.
The university has spent roughly $246 million to acquire five properties since the start of 2009. The most expensive was the 212-unit dorm Founders Hall at 120 East 12th Street, which the school had already been using for student housing and bought for $134.2 million, or more than $633,000 per unit. Although it only closed this year, a contract to buy it was signed in October 2005, city records show. Another property the university purchased was a former church parcel on the south side of Washington Square Park at 58 Washington Square South. In December 2008, the school went into contract to pay $25 million to the Catholic Archdiocese of New York for the parcel. Before the sale closed in May 2009, the Archdiocese tore the building down. NYU is building the Center for Academic and Spiritual Life there. NYU also bought the former headquarters of Forbes magazine at 60 Fifth Avenue for $65 million earlier this year. Most recently, the school paid nearly $10 million to ABS Partners for a commercial condominium in the Silk Building at 14 East 4th Street.
104 West 40th StreetThe Midtown-based investment and development firm led by managing partners Nicholas Bienstock, Christopher Schlank and Kevin Chisholm has targeted distressed office properties. It has acquired three Manhattan buildings valued at roughly $133 million. The most recent (and expensive) acquisition was the Springs Mills Building at 104 West 40th Street, a 210,000-square-foot office tower near Bryant Park that changed hands on Aug. 11. Savanna paid approximately $61.7 million for the property, which included $46 million for a defaulted loan with a face value of $55 million. In April, before Savanna bought the property, the city Landmarks Preservation Commission voted to landmark the 21-story tower.
Bienstock declined to comment other than to say that the company is midway through raising its next fund.
Savanna’s other two purchases were also acquired through distressed notes. It paid about $42 million for a controlling interest in 386 Park Avenue South, where Anthony Westreich’s Monday Properties had defaulted on its loan. Savanna bought the property and then paid down the nonperforming loan to take control, but Monday Properties remains a minority owner. Savanna reportedly plans to spend more than $40 million on renovations, leasing up the property and other expenses. Savanna’s third acquisition was an office building at 63 West 38th Street in January 2009, which it sold nine months later for $29.5 million.
The Brooklyn firm 438 Kingston Ave, also known as Tidy Realty and controlled by Joseph Popack, bought four properties in Brownsville from a joint venture of Pinnacle Realty and private equity firm Praedium Group for $18.9 million in December 2009. That price indicates that Pinnacle and Praedium took a $1.5 million loss on their $20.4 million purchase in 2006. The buildings have between 42 and 96 units each and traded for between $69,000 per unit and $75,000 per unit. Popack owns about 5,000 rental units in Brooklyn, real estate insiders estimate.
30 Seaman AvenueForest Hills-based Bronstein Properties has ponied up $33.75 million to buy six properties in Upper Manhattan, including two from the Pinnacle Group, since the start of 2009. The company, according to Real Capital Analytics, has spent $270 million purchasing about 1,300 units in Brooklyn, Queens and Manhattan since 2005. It closed on the acquisition of the 75-unit property at 30 Seaman Avenue and the 48-unit property at 133 Seaman Avenue, both in Inwood, from Pinnacle for a combined $11.3 million, or about $92,000 per unit.
Bronstein picked up four other properties, also in Inwood, from White Plains-based Sierra Assets Group for a combined $22.5 million.
Bronstein, run by managing members Barry Rudofsky and Scott Silverman, owns and manages about 5,500 apartment units in Queens, Brooklyn and Upper Manhattan. Rudofsky said the firm made purchases this year and last year to take advantage of the decline in prices. But now those apartments are no longer bargains, because “the supply is constrained and it is forcing prices up again,” Rudofsky said. So Bronstein has shifted to buying defaulted mortgages. So far, it has bought one, is in contract for a second and has an option for a third, he said.
Stanley CheraReal estate investor Stanley Chera, alone or through his Crown Acquisitions, participated in the purchase of three retail-focused properties in Manhattan and Brooklyn for a combined $356 million, including two that were considered distressed transactions. Crown Acquisitions has ownership interests in dozens of properties in the U.S. and Canada, including major retail properties in Manhattan such as 666 Fifth Avenue. Chera as an individual was listed as a joint venture partner in the acquisition of the nearly 300,000-square-foot office building at 1466 Broadway in Times Square for $193 million in June 2010. A few months earlier, in April, Crown Acquisitions bought 490-496 Fulton Street, a retail store on the Fulton Mall in Downtown Brooklyn, for $46.4 million (see story on next page). And in November 2009, Crown Acquisitions was a joint venture partner in the $117 million purchase of the retail commercial condominium at the St. Regis New York at 2 East 55th Street.
NYC School Construction Authority
Joel Klein, chancellor of the New York City Department of EducationThe city’s school system also seems to be taking advantage of the down market. With schools in Queens and throughout the city bursting at the seams, it ramped up its purchases from one per year with an average price of just over $8 million from 2004 to 2008, to eight acquisitions in 2009 and 2010 worth more than $135 million, Real Capital Analytics data showed. As a mark of the pressure on schools, the United Federation of Teachers filed suit in state court in Manhattan last month in an effort to force the city Department of Education to reduce the number of students in classrooms in Fresh Meadows, Queens. In its recent purchases, the city spent the most in Manhattan, where it paid $39 million in July for 10 East 15th Street near Union Square, a two-story building with 109,000 square feet of development rights; and $33 million to Solow Realty for a parcel with development rights for 236,000 square feet at the corner of 35th Street and First Avenue, in the footprint of the developer’s stalled mega-project. The city bought the most in Queens, in neighborhoods such as Ridgewood, Corona and Jamaica, where it spent $55.7 million. Its latest property was the $7.2 million purchase of a parking lot at 3177 Webster Avenue in the Bronx.
JD Carlisle Development
JD Carlisle Development, which has built a handful of high-profile projects such as Morton Square in the West Village and the new condo-hotel tower Beatrice at Sixth Avenue and 29th Street, bought two separate properties on West 54th and West 55th streets near each other between Fifth and Sixth avenues. In January, the Midtown South firm, led by developer Jules Demchick, paid $6 million for the four-story commercial building at 10 West 55th Street, which has about 18,500 square feet of development rights. In November 2009, the firm paid $29 million for the five-story commercial building at 9-11 West 54th Street, which has more than 40,000 square feet of development rights. The properties border four parcels at 12-18 West 55th Street where Lincoln Property, based in Dallas, announced in 2006 it was going to build a hotel-condo tower, although construction has yet to start. JD Carlisle declined to comment.
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