The Real Deal New York

Paydirt: Putnam in play, Airbnb’s NYC woes, Cushman’s big-boy club

The industry news you need to start your week, and what’s ahead

October 24, 2016 02:46PM
By Hiten Samtani

Gov. Andrew Cuomo and Mayor Bill de Blasio have both made Airbnb a target (Illustration by Lexi Pilgrim for The Real Deal)

Gov. Andrew Cuomo and Mayor Bill de Blasio have both made Airbnb a target (Illustration by Lexi Pilgrim for The Real Deal)

Not since Stuy Town has such a massive apartment package been in play.

About two years after closing on the 4,000-unit multifamily package known as the Putnam portfolio, Brookfield Property Partners TRData LogoTINY is considering selling it off. Sources familiar with a recent appraisal of the portfolio said it could be worth north of $1.5 billion.

Brookfield paid the Eisenberg family’s Urban American $1.04 billion for a majority stake in the complex in September 2014.  The fact that the REIT is already weighing a sale speaks to lucrative market for New York City multifamily assets. Urban American partnered with the City Investment Fund to buy the portfolio for $938 million at the height of the last boom in 2007. In 2005, Ruby Schron’s Cammeby’s International had paid just $295 million for it.

With high land prices and the death of 421a combining to make new rental developments unpalatable, Manhattan’s existing rental stock becomes even more appealing. Though rents for luxury product are softening, “the smart institutional money” is betting on middle-income housing due to “attractive yields no longer available in the high-end condo or rental markets,” HWE’s Daniel Parker told TRD last September.

The Putnam portfolio is nearly entirely market-rate, and an offering memo from 2014 states that with renovations, owners could increase overall NOI by nearly 25 percent. But back in 2007, it was at the center of the affordable housing debate in New York: Housing advocates lambasted the notion that city and state employee retirement funds, which are investors in the City Investment Fund, were bankrolling the purchases of former Mitchell-Lama developments.

Airbnb lawyers up: On Friday, Gov. Andrew Cuomo signed into law a bill that imposes hefty fines on hosts who list their apartments on short-term rental platforms such as Airbnb. New York City is the company’s largest market, with hosts here generating about $1 billion in revenue in 2015. The law comes after a drawn-out battle between New York AG Eric Schneiderman, the city, and Airbnb, which is now valued at $30 billion. REBNY, which represents developers and landlords, was very much in favor of the ban, which it said takes away from the city’s housing stock, hurts hotel workers and disrupts life for building residents.

Just hours after the bill was signed, Airbnb filed suit against Schneiderman, Mayor Bill de Blasio and the city. Curiously, Cuomo was not named in the suit, which likened the ban on listings to “a violation of the First Amendment.”

It’ll be interesting to see what the new law will mean for the discussions Airbnb is having with major residential landlords, including Equity Residential, AvalonBay Communities and Camden Property Trust. In December, the landlords and Airbnb were discussing the viability of a revenue-sharing deal, in which tenants at their buildings would be allowed to list their apartments on the platform with the landlords getting a cut. But earlier this month, the Wall Street Journal reported that they had all opted not to participate in an early version of the program.

Cushy gig: Move over kids, let the adults do the talking.

Cushman & Wakefield’s hire of Doug Harmon and Adam Spies is viewed as a major coup for the brokerage, which is struggling to find a seat at the table when it comes to large investment sales.

“Now, they want to go to the public markets and they need to have a solid institutional sales department to do so,” said JLL’s Ron Cohen, who left Cushman in 2010.

But besides the big payday, what could Cushman give Harmon and Spies that Eastdil couldn’t?  Dibs on every serious deal, apparently.

Sources familiar with discussions at Cushman told TRD’s Mark Maurer that brokers were being advised to bring in Harmon and Spies on all deals valued $75 million and up. That doesn’t affect the vast majority of Cushman’s brokers, of course, but it will affect the top players. Bob Knakal, for example, did over 15 deals of $75 million-plus over the past two years, according to Cushman data. And it could demotivate brokers from fighting to win bigger assignments, as they’d have to share the winnings.

Forget “eat what you kill. This is much more “eat it all.”

(Paydirt is a weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick. Read more from Paydirt here.

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