The Real Deal New York

Rockrose split means splitting up portfolio

August 06, 2009 06:28PM
By Candace Taylor

As the Elghanayan brothers draw closer to finalizing their split, details are emerging on how they will likely divvy up their massive New York City residential real estate portfolio.

Thomas and Frederick Elghanayan, who recently announced that they would leave residential giant Rockrose, will retain control of new condominiums 99 John Deco Lofts and the View in Long Island City, as well rental buildings 2 Gold Street and 455 West 37th Street, sources familiar with the situation confirmed.

As first reported by Crain’s, the two younger Elghanayans announced in April that they would leave Rockrose to form their own company, prompting speculation about how the entities would divide up their portfolio of some 20 New York City residential apartment buildings with more than 5,000 units.

Thomas and Frederick will remain in the company’s 290 Park Avenue South headquarters and reportedly will soon begin operating under the name TF Cornerstone, while taking control of the company’s five commercial buildings in Washington, D.C. Their older brother, Houchang “Henry” Elghanayan, will maintain the Rockrose name and relocating to 666 Fifth Avenue.

As The Real Deal reported, Henry Elghanayan will maintain control of the former NYU dormitory 200 Water Street in the Financial District, where leasing has begun.

Marketing materials that were distributed at 200 Water Street and obtained by The Real Deal identify nine other rental buildings as belonging to Henry Elghanayan’s Rockrose. These include three in the West Village — Archive, 110-114 Horatio Street and 100 Jane Street — as well as Midwest Court on 53rd Street; 22 River Terrace and Tribeca Pointe in Battery Park City; the Plaza East in Kips Bay, and East Coast in Long Island City.

This suggests that Thomas and Frederick may be retaining Rockrose’s remaining rental buildings: the Financial District’s 45 Wall Street, Chelsea Centro on 26th Street, the Fairfax at 201 East 69th Street, Plaza West on 35th Street, Turtle Bay Towers on 46th Street, and West Coast at 95-97 Horatio Street in the West Village.

Full details of the split won’t be confirmed until the two parties finalize the terms of their separation, however. Henry Elghanayan declined to comment.

But sources confirmed that Thomas and Frederick are slated to take over sales at the View, the condominium portion of the East Coast development in Long Island City, and condo conversion 99 John Street.

New condos have faced a bevy of challenges in the current market, so the two younger brothers will have their hands full, said Derrick Gross, a business analyst at Streeteasy.

“The View is not selling well, and 99 John has not been selling well,” Gross said. “To be stuck with those assets is trickier.”

In addition to that, Gross said, the remaining rental tenants at condo conversion 99 John Street could be a deterrent to buyers.

“There are a lot of comparable projects in the Financial District that don’t have that rental component, so those properties are more attractive to live in,” he said.

To help spur sales at both projects, Rockrose had been offering “buyback guarantees,” where the sponsor promises to buy back the unit at 110 percent of the original sales price after five years. At 99 John Street, Rockrose also offered a rent-to-own option and hired the Corcoran Group in March to sell a package of 15 units to potential investors for $11.3 million. There’s no word on whether TF Cornerstone will continue these incentives, and the younger Elghanayans declined to comment.

The two brothers that are teaming up (there are four — brother Jeffrey worked at the company before retiring) are also handling 455 West 37th Street, a 23-story tower located at 10th Avenue that Rockrose started leasing this winter. The 260-unit building has studios and one-, two- and three-bedroom units starting at $1,980, but renters in the building recently have been receiving one month of free rent, according to Streeteasy.com.

The building is located in the emerging Hudson Yards area, where Rockrose has been developing 835 luxury units across the street at 505 West 37th Street. It’s unclear which company will take control of that project.

Two Gold Street, which began leasing in 2004 and completed a second 26-story tower in 2008, has 839 units. With amenities such as a 9,000-square-foot landscaped rooftop with a wet bar, the building has gained a reputation for attracting 20-something-year-old New Yorkers. Rents start at $2,364 but new renters have been receiving two months free rent, according to the Rockrose Web site.

Comments are closed.

MENU