The Real Deal New York

With $73M multi-family acquisition, Stone Street doubles portfolio

Deal for 16 residential buildings includes Murray Hill, Downtown Brooklyn properties

November 16, 2012 03:26PM
By Katherine Clarke

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Stone Street’s Jeffrey Kaye and Robert Morgenstern and 234 East 33rd Street

Stone Street Properties, a real estate investment firm founded last year by Jeffrey Kaye and Robert Morgenstern, has closed on a deal for a 16-building Manhattan and Brooklyn portfolio composed of 300 residential units, the founders told The Real Deal today.

The deal for the portfolio, made up of 14 Manhattan buildings and two properties in Brooklyn, closed yesterday for $73 million. Paul Smadbeck of Massey Knakal Realty Services brokered the deal on behalf of the seller. Stone Street did not use a broker.

HIG Realty Partners, a Florida-based investment firm, is Stone Street’s equity partner is the deal. Stone Street’s principals declined to comment on the structure of their partnership. The transaction is one of HIG’s first in New York.

“There was a tremendous amount of competition until we signed a hard contract deposit of $7.3 million,” Kaye said. “Massey Knakal was about to take it out to the market. We preempted the market by signing the check within days.”

Although the founders declined to comment on the identity of the seller, they said he was a “long-tem family owner and operator,” who was “retiring by selling this portfolio.” Public records reveal the seller as longtime Manhattan landlord Robert Koppelman. Koppelman has owned the majority of the portfolio’s buildings since the 1990s, records show.

With this acquisition, Stone Street has almost doubled its holdings. The firm now owns approximately 750 units across 28 buildings citywide, its founders said. Last year, Stone Street acquired a portfolio of five rental buildings in the East Village and on the Upper East Side from Icon Realty Management. That deal was valued at $90 million.

In Manhattan, the new 16-building deal includes properties located primarily in Murray Hill, on the Upper East Side and in the East Village. They are 101 MacDougal Street, 104 East 7th Street, 438-440 East 13th Street, 236-236 East 33rd Street, 410 East 64th Street, 319 East 78th Street, 233 East 82nd Street, 310 East 83rd Street, 325 East 83rd Street and 504 East 88th Street. The Brooklyn properties are located at 354-356 State Street in Downtown Brooklyn.

As previously reported, Stone Street manages its properties in-house, aiming to add value by reconfiguring and renovating apartments.

  • FrankieSays

    “There was a tremendous amount of competition until we signed a hard contract deposit of $7.3 million,” Kaye said. “Massey Knakal was about to take it out to the market. We preempted the market by signing the check within days.”

    By this, it looks like there was ‘a’ market before MK put it on ‘the’ market. Unless of course they just used the phantom ‘other buyer’ trick to get them up. My (industry) guess is this was shopped directly to them (hey, they dont use a broker, DID YOU HEAR THAT OTHER BROKERS?!?! Great gob PR team!). Furthermore, MK did not do their fiduciary duty to the owner of this portfolio by putting it on the market to get the best price.

    This is a good example of industry BS

  • enotsrevlis

    Half the buildings mentioned above they bought from Icon a few years ago. Koppleman stuff was marketed to a bunch of groups before stone street bought it. They must be underwriting 10% rent growth and 4% exit caps to be getting this done. Its nice doing deals without your own money!!!!

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