The Real Deal New York

Aussie REIT buys Crown Heights multifamily portfolio for $25M

Dixon's US Masters Residential Property Fund makes another residential deal in borough

July 16, 2014 02:03PM
By Hiten Samtani

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From left: Luke Sproviero, Alan Dixon, Derek Bestreich and 770 St. Marks Avenue

From left: Luke Sproviero, Alan Dixon, Derek Bestreich and 770 St. Marks Avenue

UPDATED, 4:46 p.m., July 16: Australian real estate investment trust Dixon Advisory’s US Masters Residential Property Fund is making a splash in Brooklyn’s multifamily market, paying $25 million for a 124-unit rent-stabilized portfolio in Crown Heights, The Real Deal has learned.

The sellers were Yechiel Weinberger and Bernard Miller, who together own a large multifamily portfolio in several Brooklyn neighborhoods, including Flatbush and Crown Heights. The four properties in the transaction are 770 St. Marks Avenue, a 54-unit elevator building; 637 St. Marks Avenue, a 30-unit walk-up building; and 24-30 Rogers Avenue, two contiguous five story walk-ups with a total of 40 units.

Marcus & Millichap’s Derek Bestreich and Luke Sproviero brokered the off-market transaction. The brokers declined to name or confirm the buyer. But sources active in the area and investor documents indicate the buyer to be the US Masters Residential Property Fund, which aims to make direct investments in the New York metropolitan area residential market, according to its website.

In June, the fund partnered up with Union City, N.J.-based Excelsior Equities to buy a 202-unit multifamily portfolio in Bedford-Stuyvesant and Crown Heights, according to investor documents. Since its inception, the fund has acquired more than $400 million worth of freestanding and multifamily properties in its target market, according to the documents.

Dixon Advisory, led by Alan Dixon, has also made several dozen acquisitions in Bushwick.

In August, Freddy Sayegh, the founder of Burke Leighton Asset Management, paid Praedium Group and Pinnacle Group $22 million for a 200-unit rental building at nearby 805 St. Mark’s Avenue, as TRD reported.

For several years, rental brokers, including some from the Corcoran Group, would bill properties as being part of Prospect Heights, though they were actually located in Crown Heights, to avoid any association with a neighborhood that once evoked concerns about crime.

The area’s rapid gentrification, however, has put an end to this strategy in recent months. Crown Heights saw the highest increase in pricing in Brooklyn this year, according to a June MNS report, with average monthly rents for one-bedroom units in the area now standing at $2,125.

And as development heats up in the neighborhood, so do land prices, which have vaulted from around $100 per buildable foot in 2012 to more than $200 in 2014, according to Brooklyn-based brokerage TerraCRG.

  • SJ

    I heard they got 19x grm.

    • richjew

      Nope.

  • SoBrokeee

    u cudnt pay me 20 million to live in crown heights hahaha

    • no-permits

      why?

  • Puma

    Dixon Advisory and US Masters are the same thing.

    • HitenSamtani

      Thanks, I missed that! Updated

  • rental guy

    The brain and his bulldozer strike again…. word is that they are doing a lot of 1031 shopping in PLG

    • WannaBeLandlord

      You seem to know whats up in BK. Is there any upside value left in buying rental buildings today? You like Redhook at all?

  • strangeone

    did anyone see 770 st marks back in the day? Jesus.
    Kudos to the seller job well done

  • kingmaker

    Marcus Mill did this deal ? Anyone else find that kinda strange?

    • richjew

      Yes. They could have gotten more money for st. Marks

      • rental guy

        More money? They set just set the ceiling for the whole neighborhood.
        Do your comps. they cleaned up.
        I got listing from rosewood for substantially less.

        • richjew

          Correct redid numbers I heard that st. Marks got an allocation of 250k a unit wow!!

          • rental guy

            Just made my property on the block more valuable.

          • richjew

            I don’t own anything on that block. But have a whole bunch in neighborhood. Going to have to redo my real estate schedule;)

          • rental guy

            Check brownstoner looks like Weinberger is selling out.
            Wonder why.

          • richjew

            Maybe miller had enough of him. He has better partners/mangers

          • rental guy

            With these kind of numbers he can partner with me anytime!
            BTW it looks like 270 a door on st marks. Insane.

          • richjew

            270k seems unlikely for 770 st. Marks. That would mean that 637 and rogers got under 150k a door. At these valuations I would expect them to get closer to 175k

          • rental guy

            Went to look at this package about a year ago with Berger from rosewood (he couldn’t deliver deal). The rogers and st marks buildings were all studios. 770 had the big units but 10-12 rent control units plus housing issues.
            Don’t know why you seem so against Weinberger but Bravo.

          • richjew

            Nothing against him at all.

      • WannaBeLandlord

        You seem to know whats up in BK. Is there any upside value left in buying rental buildings today? You like Redhook?

        • rental guy

          don’t know much about red hook I only own in Bushwick & crown heights good luck!

    • DV

      Why strange?

      • richjew

        Bec. They dont do many deals neither do they have access to these types of sellers/operators

        • DV

          You don’t know Derek then.

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