Bronx Rent-Regulated Portfolio Trades for $196M
Related Companies-affiliate Related Fund Management sold a sizeable multi-building rent-stabilized portfolio located in the Bronx for reportedly $195.5 million. Although the transaction has yet to hit city records, a review of sales from February through May 2014 by the entity with a prefix “NYSandy” indicates that a combined total of 39 buildings were purchased for a total of $260 million through 35 transactions. In addition to the nearly 25% loss of the discounted sale price, an investment of reportedly $32 million in capital improvements since 2014 is a further loss, since despite a portion going into some apartment improvements, tighter rent law restrictions that went into effect by the Housing Stability & Tenant Protect Act passed in 2019, effectively closed the ability to transition renovated units to market rate. Reportedly owning nearly 100 similar properties at one point, the latest sale by the fund is part of a move to exit the sector; and although some sites were sold pre-2019 at double-digit profits, those that have traded more recently have not done so well. “Backed by city pension money, Related fund Management came out of the late 2000s financial crisis and began acquiring outer-borough rental properties as part of the rebuilding effort following 2012’s Superstorm Sandy,” which is why the entities had “Sandy” in their names. According to a Commercial Observer press release, Longacre, a partnership of New York-based real-estate companies PH Realty Capital and Rockledge are the purchasers of the residential package that has approximately 2,021 total residential units in Bronx neighborhoods such as Wakefield, Norwood and University Heights. PH Realty President Peter Hungerford stated in the article by Crain’s New York that “he plans on holding the sites until mortgage and insurance rates and the regulatory environment improve;” and since “buying at a basis with an expected cash flow, it allows us to sit for a long time and wait for some combination of things to get better, but New York is an unsustainable system right now.”