04/20/2011

Class-B Rental Package for Sale in Manhattan

Seven apartment properties in northern Manhattan neighborhoods are being pitched to value-added investors.

The Class-B buildings have 362 apartments, most subject to the city's rent-stabilization guidelines. Bids for the portfolio could reach $90 million, or $249,000/unit. That would translate into a capitalization rate of about 5.25%.

It's unclear whether the owner, Vantage Properties of New York, would consider offers on individual buildings or groups of buildings. Massey Knakal has the listing.

The mid-rise properties, clustered along Broadway in Washington Heights and Hamilton Heights, were built in the 1910s and 1920s. They range in size from 33 to 63 apartments. The units primarily have 1-2 bedrooms, with a smattering of studios and units with 3-5 bedrooms. There is also street-level retail space in each building.

Fifty-three apartments have no rent restrictions, and six fall under strict rent-control rules. The rest are rent-stabilized, allowing for modest annual rent increases and bigger ones as units turn over and are renovated. Only 27 units were fully renovated recently.

Because of the large number of rent-restricted units, as well as the sizable amount of retail space, Vantage is stressing the long-term potential upside. Although sometimes difficult, the conversion of rent-regulated apartments to market rates would significantly boost returns. The average rent in the portfolio is about 40% below the area's market average, according to Vantage. Also, a buyer might be able to raise rents as the retail leases roll over.

Vantage forecasts the portfolio will produce $7 million of gross revenue in the first year, which would translate into net operating income of about $5 million.

The properties are at:

3421 Broadway, at West 139th Street (33 units).

610 West 157th Street (44 units).

3851 Broadway, at West 161st Street (62 units).

559 West 164th Street (61 units).

4141 Broadway, at West 175th Street (61 units).

4151 Broadway, at West 176th Street (63 units).

4180 Broadway, at West 178th Street (38 units).

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