The Real Deal New York

Dermot to buy Kips Bay luxury building for $175M

AvalonBay selling 185K sf, 209-unit rental at 377 East 33rd Street

November 05, 2015 06:00PM

From left: Dermot CEO Stephen Benjamin, 377 East 33rd Street in Kips Bay and AvalonBay Communities CEO Timothy Naughton

From left: Stephen Benjamin, 377 East 33rd Street in Kips Bay and AvalonBay Communities CEO Timothy Naughton

The Dermot Company is in contract to buy a Kips Bay apartment building from AvalonBay Communities for $175 million, part of its effort to transition into the luxury market.

A majority of the 209 units in the building — located at 377 East 33rd Street — are occupied. The 23-story building consists of 185,549 square feet of residential space and 19,000 square feet of commercial space, which is currently leased by New York University.

Dermot and an “unidentified wealthy individual” teamed up to buy the property, Real Estate Alert reported.

The acquisition is one of Dermot’s first since London-based investment firm Forum Partners bought a 50 percent stake in the company in July. The purchase follows Dermot’s purge of its non-new construction, rent-stabilized assets in the city, which came on the heels of the retirement of founder William Dickey.

In February, Dermot sold off a 32-building portfolio to A&E Real Estate Holdings for $360 million. The sale was part of Dermot’s efforts to tap into the luxury markets in Manhattan, Brooklyn and Queens, Dermot CEO Stephen Benjamin told The Real Deal. It has about $2 billion in assets under management.

The Kips Bay building offers a few avenues to hike up rent, Real Estate Alert reported. It has nine rent-stabilized apartments, eight of which are rented below the maximum permitted rent. Studios start at $2,770.

AvalonBay CEO Timothy Naughton told shareholders last week that it was “very cautious” on the New York City residential market due to concerns over the housing supply, land prices and construction costs.  [Real Estate Alert] — Kathryn Brenzel

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