The Real Deal New York

Tavros buys Chelsea Muse for $27.5 million

Residential units to remain rentals; basement level could house event space.

December 24, 2012 02:00PM
By Hiten Samtani

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From left: Peter Von Der Ahe, Chelsea Muse exterior and interior and Joseph Koicim

Tavros Capital Partners has purchased the Chelsea Muse, a luxury mixed-use building located at 537 West 27th Street, for $27.5 million, The Real Deal has learned. The sellers were Ekstein Development, RD Management and L&M Development Partners. The deal closed on December 20.

The five-story, 47,479-square-foot Chelsea Muse was constructed in 2011 by Ekstein, which also owns the neighboring +art condominium building. Its 31 units range from studios to two-bedrooms — some of which have large terraces — and its amenities include a fitness center and a virtual doorman. The building also includes three ground-floor retail spaces with 125 feet of frontage on 27th Street.

Chelsea Muse — which is situated a block from the High Line, and which is adjacent to the Americano Hotel and Avenues World School — was conceived as a rental building, and the developers had long planned to sell the building said Joseph Koicim, vice-president of investments at Marcus & Millichap, which represented both the buyer and the seller in the deal. “It’s rare to see this type of product in this market, especially as a rental,” Koicim said.

Marcus & Millichap’s Peter Von Der Ahe, Michael Helpern and Sean Lefkovits were also involved in the deal, which came out to approximately $790 per square foot, or a cap rate of 3.6 percent. Von Der Ahe and Koicim’s team focus solely on multifamily properties in New York, and have closed eight Chelsea buildings in the last month and a half, including 233 West 14th Street, between seventh and eighth avenues, for $6.8 million and 402 West 22nd Street, between ninth and tenth avenues, for $3.53 million.

A sticking point with the Chelsea Muse sale, Koicim said, was the 12,686 square-foot below-grade space. “It’s such a large space with such high ceilings, many buyers were unsure what to do with it.” Koicim said that although they received over 20 written offers for the building, many of them were contingent upon leasing the space. Another concern was the tax rate, which is set to increase over the next 10 years as the building has a 421a tax abatement.

Tavros plans to use the basement space either as a restaurant or an event space, Koicim said, and Helpern added that the company has already booked events during February’s Mercedes-Benz Fashion Week.

Ekstein initially marketed both art+ and Chelsea Muse as being immersed in the vibrant neighborhood art scene. Earlier this year, however, citing residents’ complaints, the developer sued the adjacent Landmark Arts Building, which houses several art galleries, for keeping residents up at night with bright floodlights used in the galleries.

Tavros’s recent deals include a partnership with Lloyd Goldman’s BLDG Management to acquire the foreclosed condominium conversion site at 448-452 Broome Street, in the Soho Cast Iron Historic District, for $17 million. Representatives from Tavros could not be immediately reached for comment, but Koicim said the company intends to keep the residential units as rentals and may look to increase rents.

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