The Midtown-based landlord and development firm Thor Equities – along with joint venture partner GreenOak Real Estate — closed on the purchase of two Upper West Side rental buildings for $85 million from long-term owners yesterday. The acquisition was the first residential purchase for Thor since launching an apartment ownership and development division in October.
Thor, headed by CEO Joe Sitt, and the real estate investment firm GreekOak, purchased 120 Riverside Drive at 84th Street and the adjacent 125 Riverside Drive with a total of 97 apartment units, from an entity called Arnav Industries, a spokesperson for Thor told The Real Deal. Arnav is headed by members of the Wassner family, city records show.
The two buildings combined generated a net operating income in 2012 of $570,000 off total revenue of $2.9 million — including $844,000 from rent-regulated tenants and $1.6 million from the free market tenants. That information was reported by the real estate finance database Genesis Computer Consultants, based on city property tax filings.
The NOI figure would yield a capitalization rate of less than 1 percent, far lower than the 4 percent figure Massey Knakal Realty Services reported earlier this year as the average for 2013 transactions involving Manhattan elevator buildings.
That figure, however, was outdated and far too low, several industry sources said. The expected NOI for the two buildings in 2014 was much higher, between $2.5 million and $3 million, they said, which would yield a cap rate of 3 percent, which is closer to this year’s average.
Regardless of the precise cap rate, the purchase is further evidence that investors are willing to take low returns in the near term with the expectation of greater income in the coming years.
The nine-story, 120 Riverside, has a total of 39,900 square feet, while the 12-story, 125 Riverside, has 70,312 square feet, and together they have an additional approximately 25,000 square feet in air rights, information from the data website PropertyShark shows.
The sale price per each of the 97 units was just over $876,000, and the price per square foot for the 110,212 square feet of the existing structures was nearly $773 per foot.
The acquisition was first announced in December. In January, Crain’s reported the price — and also that Thor was expected to close soon on the purchase of 838 West End Avenue for $67 million — but did not include GreenOak’s involvement or additional financial details.
The buildings, both constructed in 1907, are in the city’s Riverside-West End Historic District.
Thor announced in October it was launching a residential division headed by Alan Klein and Jonathan Fishman, both formerly of Ofer Yardeni’s Stonehenge Partners, a large residential landlord.
GreenOak, headed by Sonny Kalsi, John Carrafiell and Fred Schmidt, owns property in Manhattan, Boston, Florida, California as well as in Europe and Japan, and has been an active buyer in Manhattan since forming in 2010, often partnering locally with East End Capital Partners. Most recently, GreenOak and East End partnered to buy 123 William Street in October 2013 for $134 million.
Steven Vegh, president of the Westwood Realty Associates, was the exclusive broker on the deal.
“This was seen as an incredible opportunity for Alan (Klein) and Jonathan (Fishman) to enter the core NY real estate market in their new venture,” Vegh said.