Brookdale sells apartment buildings for $22M

Investment group led by David Spira, Robert Wolf buys East Flatbush, Brownsville properties
By Adam Pincus | November 06, 2012 12:30PM

A group of Brooklyn multifamily investors purchased four residential buildings in Brooklyn from the financially pressed Brookdale University Hospital and Medical Center, for $22 million, a broker on the deal said.

The investment group led by major apartment owners David Spira and Robert Wolf closed on the purchase of the apartment buildings, located in Brownsville and East Flatbush, on Friday, said Matthew Bordwin, co-president of GA Keen Realty Advisors. Keen was the exclusive broker for Brookdale, which is being restructured.

The sale was another example of financially distressed hospitals selling assets. In 2011, Rudin Management paid $260 million for the main campus of the bankrupt St. Vincent’s Hospital in Greenwich Village. And Long Island College Hospital sold 110 Amity Street in Cobble Hill, Brooklyn for $6.1 million in 2007.

The largest property Brookdale sold was the 172-unit apartment building at 7 Hegeman Avenue in Brownsville, followed by the 113-unit 660 East 98th Street, also in Brownsville. The other two, in East Flatbush, were the 54-unit 505 Rockaway Parkway and the 42-unit 525 Rockaway Parkway.

The price per square foot was about $58 per square foot, much lower than the average price in Brooklyn, which commercial brokerage Massey Knakal Realty Services reported was about $237 per foot in the third quarter of 2012. The units are mostly occupied by employees of the hospital paying below-market rents, Bordwin said.

Bordwin said the price was low per unit because the units are now rent regulated under the new ownership. “The rents being paid by the tenants are below-market,” Bordwin said. “We expect those rents to be locked in at the existing numbers due to rent regulations so they are unlikely to be able to be bumped up to market rents. So the resulting sale was an outstanding purchase price given the actual [net operating income].” In addition, the new owner must pay taxes, while the prior owner, a nonprofit hospital, did not, Bordwin added. The other brokers on the deal from Keen were Harold Bordwin, Christopher Mahoney and Heather Milazzo.

Spira and Wolf did not respond to a request for comment.

Spira and Wolf own several thousand apartment units in the city, including a block of apartments in the cooperative 200 Central Park South, insiders said.

Earlier this year, Brookdale hired the crisis management and restructuring firm Grant Thornton to stabilize the hospital. The residential buildings were considered outside the primary function of the hospital, a person familiar with the decision to sell the buildings said, and so they were put on the market.