The Real Deal New York

AREA-Vantage Queens portfolio fetches $300M-plus: sources

December 23, 2013 01:24PM
By Adam Pincus

Mack-Rubler-Sunnyside-Eisenberg

From left: Richard Mack, Neil Rubler, 43-09 47th Avenue (Photo: PropertyShark) and Douglas Eisenberg

A 29-building Queens apartment portfolio once owned by AREA Property Partners and Vantage Properties has traded for more than $300 million, according to city property records and industry sources.

The actual purchase price was in dispute among people familiar with the deal. Some put it at about $306 million, while others said it could be as high as $360 million. Only some of the building sales have been recorded publicly with the city, but all are expected to be in the coming days.

The buyers, who could not immediately be identified, snapped up units in gentrifying regions of the borough, including the 109-unit 43-09 47th Avenue in Sunnyside, the 132-unit 99-60 64th Avenue in Rego Park and the 70-unit 35-16 34th Street in Astoria.

William and Richard Mack’s AREA Property Partners — known at the time as Apollo Real Estate Advisors — partnered in October 2006 with Neil Rubler’s management and investment company Vantage Properties to pay about $286 million to long-time owner Nathan Katz for a 32-building portfolio with a total of 2,124 units. The acquisition had a first mortgage loan of $192 million, a $50 million mezzanine loan and $100 million in equity invested in the portfolio, sources said.

The Apollo and Vantage acquisition was part of a wave of purchases by large private equity firms of rent-regulated housing in New York City. But the partnership stumbled in its business plan to aggressively raise the rents, which ultimately drew tenant lawsuits seeking to halt the practices. Andrew Cuomo, then the New York Attorney General, and Vantage Properties inked a $1 million settlement in 2010 related to those contentious tactics.

Los Angeles-based Ares Management in July acquired Area, and the portfolio is one of the legacy assets of AREA Property Partners.

The trade was a direct transaction between Ares and the buyers, and there were no brokers involved, sources said.

The purchasing entities, all Delaware companies that provide a local address with Midtown-based A&E Real Estate Holdings, as of Monday morning have recorded 21 property transactions for a total of $253 million, city property records show. Another eight properties have recorded loan transactions that indicate that they, too, will be part of the overall acquisition. An affiliate of A&E bought another former piece of the portfolio, the 172-unit 34-15 Parsons Boulevard in Flushing, in June for $33.2 million.

The discrepancy between the prices may be tied to millions of dollars intended for improvements to the buildings over time, sources said, but it was not clear why that would impact the recorded price.

A&E, which has been an active buyer this year, will provide asset management for the portfolio, but was not the properties’ owner, one industry source told The Real Deal.

A&E and Vantage did not immediately respond with a comment or clarification on the sale. A spokesperson for Ares declined to comment.

It was not clear whether Vantage was still involved in the ownership structure at the time of the sale. In 2011, AREA took full control of this and another large portfolio also in Queens and hired third-party management firms such as Bronstein Properties and Cooper Square Realty to run the buildings.

A&E, led by partners including Douglas Eisenberg, who was formerly with New Jersey-based landlord Urban American, has purchased thousands of apartment units in the city since it was founded in 2011, including the 806-unit apartment portfolio in September, information from Real Capital Analytics shows. That acquisition was a joint venture with investment firm AllianceBernstein and included buildings such as the 110-unit 245 East 80th Street in Yorkville.

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