Thursday, February 13, 2014

176 E. Third St. hits the market for $38.5 million

[Via Stone Street Properties]

The large residential building between Avenue A and Avenue B arrived on the market yesterday.

Per the Massey Knakal listing:

Standing six stories tall, the building encompasses a total of 43,520 gross square feet and currently contains 48 residential units, 1 commercial unit and 1 professional unit. Currently, 27 units are rent regulated, 21 are free market, and one free market unit is occupied by the building's super. The building possesses substantial upside potential as it is still approximately 56% rent stabilized.

Currently, the building is renting at an average of $39.00 per net square foot with the RS units averaging approximately $19.00 per net square foot. These figures illustrate that there is still a tremendous amount of additional revenue available to capture. Over time new ownership should have the opportunity to turn over some or all of the remaining stabilized units, convert them to free market apartments and increase their annual gross revenue by over $1,000,000

The property is part of "The East Side Elevator Portfolio," a five-building multifamily package available for $150 million. This address is going for $38.5 million. The buyer will become the tenants' third landlord in seven years.

In 2008, a contentious battle broke out between longtime tenants and the building's new owners, Icon Realty. In September 2008, the Post reported that several rent-stabilized tenants were fighting to keep "their East Village neighborhood affordable by turning down buyout offers of up to $125,000." (Bob Arihood covered the story first here and here.) The residents also accused Icon of harassment.

Per the article:

The tenants complained that the landlord recently changed an electronic lock on the building’s front door to a more difficult standard version as a ploy to send them to an Icon representative looking for help. The rep would then use the opportunity to pitch the buyout, the tenants said.

They want to buy people out and renovate the apartment, and then they want to flip the building,” said Heather Gradowski, who pays less than $700 a month for her one-bedroom apartment.

In the fall of 2011, Stone Street Properties bought the five-building portfolio for $90 million from Icon, according to The Real Deal. (At this time Stone Street renamed the buildings; No. 176 became "The Jesse.")

According to public records, Icon paid $14 million for No. 176 in August 2007.

Did someone say something about flipping the building?


Anonymous said...

That's a great building. I would love to live there. I hate to say it, but I would take a buyout if I was offered one. It's gotten so hard to live here with all of the noise. I thought it would be quiet last night because of the weather, but it wasn't, and I am sitting here exhausted as usual.

Ken from Ken's Kitchen said...

Over time new ownership should have the opportunity to turn over some or all of the remaining stabilized units, convert them to free market apartments and increase their annual gross revenue by...

This is the exact same line of shit that was sold to Tishman Speyer when they bought Stuy Town. Billions got vaporized in that deal after Tishman speyer defaulted and three years later the RE market is already back at the same bullshit game.

If you have the stomach for it, the whole mess is laid out in lurid detail in NY Times RE reporter Charles Bagli in his book, "Other People's Money."

nygrump said...

9:04 AM - where is your noise from? Its a health issue that is being ignored by the Health Dept. There is a huge body of science showing noise and vibration are unhealthy. We need a city politician who will run with this as a health issue.

Anonymous said...

Those hoping to buy out rent stabilized tenants may learn that tenants can do the math too. Unless one is desperate and short-sighted, it is irrational to sell out a nice apartment in an improving building that only costs $700 or $1k/month for less than about $800,000. That's how much it would cost to buy a comparable apartment.

Anonymous said...

@12:44 pm: yes, and even if someone were to give up a rent-stabilized apt to buy a similar one for 800k, they'd likely be paying as much monthly in maintenance and taxes as their former rent. So the only way a buyout would really make sense is if someone is ready to leave the city and move someplace much cheaper.

chris flash said...

A decades long black single mom was evicted recently when her landlord took her took her to court after capturing an image of a young black man on their surveillance camera handing her some money in the hallway outside of her apartment.

Never mind that this was her SON giving his mother the change after having gone shopping for her!! She was evicted anyway!!

If the city imposed a HEAVY "flip tax" (something like 50%) on properties sold in less than 5 years, it might make a difference in stemming some of the hyper-inflation and flipping of properties engaged in by less than five deep-pocketed real estate players on the LES....

Scuba Diva said...

I wonder how much longer the super will be on-premises? In a "free-market" unit? Inquiring minds want to know!