The Real Deal New York

Fairstead, E+M look to sell 47-building East Harlem portfolio

Once-distressed 1,200-unit package could sell for up to $400M: sources

March 11, 2016 08:00AM
By Mark Maurer Twitter_logo_blue copy

Dawnay Day

From left: 112 East 103rd Street, 411 East 118th Street and 291 Pleasant Avenue in East Harlem (inset: Stephen Siegel and Shimon Shkury)

Fairstead Capital and Irving Langer’s E+M Associates are shopping a once-distressed 47-building East Harlem multifamily portfolio, The Real Deal has learned.

The 1,181-unit package is best known as the “Dawnay Day portfolio,” named after the now-defunct British investment firm that owned the buildings for two years until it fell into foreclosure in 2009.

Sources familiar with the portfolio told TRD said they expect it to sell for approximately $350,000 per unit, or close to $400 million. If it were to sell at that price, the package would be the priciest New York City multifamily deal of the year so far.

Ariel Property Advisors’ Shimon Shkury and Victor Sozio, who declined to comment, are marketing the package, sources said. The total square footage of the portfolio was not immediately clear.

The addresses include 112-116 East 103rd Street, 233 East 111th Street, 1567 Lexington Avenue, 291 Pleasant Avenue and 411 East 118th Street, property records show.

In 2007, U.K.-based Dawnay Day made a splash in the U.S. when it bought the properties for $225 million from Harlem landlord Steven Kessner, who had been buying each of them up since the 1980s. At the time of the sale, the properties had almost 2,500 violations, the New York Times reported in 2009. (The current number of remaining violations is unknown.)

Dawnay Day sought to hike rents after tenants in the rent-stabilized units – which comprise the majority of the portfolio — had been displaced. Then, as the housing market crashed, the lender moved to foreclose on the buildings in 2009.

E+M and Fairstead – then known as SG2 Properties – teamed up to pull the properties out of foreclosure for an undisclosed price, sources said. Fairstead declined to comment, while E+M could not be reached.

Fairstead, which is a restructuring of a partnership between SG2 Properties and a family office, has been particularly active with multifamily acquisitions of late. The investment firm — led by CBRE brokers Stephen Siegel and Andrew Goldberg and partners Jeff Goldberg and Will Blodgett — bought the Caiola portfolio for $690 million with Blackstone Group in September and entered contract last month to buy the Savoy Park complex in Harlem for north of $300 million.

The building’s two owners previously partnered on another large portfolio. In 2010, E&M bought a stake in 3,600 Bronx apartments owned by SG2. Together, over the next five years, they sold it to several investors in separate transactions for a combined $340 million.