First part of Africa Israel’s 88 Leonard Street sale closes

By Adam Fusfeld | August 31, 2011 09:25PM

88 Leonard Street

Chicago-based real estate investment firm Waterton Associates closed on the first part of its purchase of 88 Leonard Street from Africa Israel USA this evening, the firm’s managing member and co-founder, David Schwartz, confirmed.

Waterton closed on a 49 percent stake of the 352-unit rental building near Broadway in Tribeca for $37 million. Schwartz, whose firm was represented by Steven Vegh of Multi Investment, said the transfer of Africa Israel’s remaining stake, the senior mortgage and the mezzanine loan would close sometime in the first half of 2012. The prices for those components were $17 million, $132 million and $24 million, respectively, according to a previous report by Bloomberg News, for a total cost of about $210 million. The deal is being closed in two stages for accounting purposes, according to Schwartz.

The purchase was funded by the $500 million Waterton Residential Investment Fund 11 and marks the firm’s second purchase in New York City. It also bought the notes on the Addison Brooklyn at 221 Schermerhorn Street in Downtown Brooklyn last December. Schwartz said the firm has more New York City transactions pending as it looks to build its presence in the area, but declined to discuss the deals until they close.

“We’ve targeted this market for a long time,” he said. “But it’s taken a long time to actually enter it because first the market was too hot, and then there was the downturn… Now, we’re seeing good opportunity.”

Cushman & Wakefield brokers Steven Kohn, Helen Hwang, Nat Rockett
and Karen Wiedenmann began marketing 88 Leonard for Africa Israel in February, which sought $200 million in an effort to reduce its debts. The firm came to an agreement with Waterton in June. At the time, Africa Israel’s U.S. CEO Tamir Kazaz called Waterton “sophisticated real estate investors” that he believed would “continue to increase the value of the asset.”

Neither Kazaz nor an Africa Israel spokesperson could be reached for comment. None of the Cushman brokers were immediately available for comment, and Vegh of Multi Investment declined to comment.

Constructed in 2007, the building has three units currently on the rental market, according to, including a $3,150 per month studio, a one-bedroom asking $4,150 in monthly rent and a three-bedroom apartment listed for $8,450 per month. But Schwartz said he believes because of the Tribeca neighborhood, which he called “one of the best locations on earth,” there is a lot of room for rents to rise over the next few years.

“Long term, I think the rents will get much better,” he said. “As the World Trade builds out and some of those tenants move in, the high-quality units in this building will become more desirable.”