Brookfield, Urban American mull selling Putnam portfolio

About half of the nearly 4,000 apartments have Section 8 vouchers

TRD New York /
Oct.October 21, 2016 05:40 PM
Putnam Portfolio

Roosevelt Landings on Roosevelt Island (inset: Brookfield Property Partners Chairman Ric Clark)

Brookfield Property Partners and Urban American Management are considering the sale of the massive Putnam multifamily portfolio in Upper Manhattan and on Roosevelt Island, The Real Deal has learned.

The companies have not yet hired a broker to market the portfolio, which has nearly 4,000 apartments. But sources privy to the talks said they have met with a number of brokers in recent weeks, including a team from Savills Studley.

Sources familiar with the portfolio said it could be worth between $1.5 billion and $1.6 billion.

It’s been almost two years since Brookfield closed on a majority stake in the buildings for $1.04 billion from Urban American, in what was the largest multifamily deal of 2014. Urban American, a New Jersey-based landlord led by the Eisenberg family, retained a single-digit percentage stake in the portfolio and continued to serve as the property manager.

To close on the acquisition, Brookfield, the Canadian real estate giant behind Brookfield Place and the Manhattan West redevelopment, secured $507 million in financing from New York Community Bank and $234 million from the Bank of China.

Any potential sale would see both Brookfield and Urban American exit their stakes completely, sources said.

The package consists of six complexes holding a combined 24 buildings with 3,962 rental apartments. It spans 310,000 square feet. The complexes include the 1,003-unit Roosevelt Landings on Roosevelt Island; the 600-unit Heritage at 1295 Fifth Avenue, 1309 Fifth Avenue and 1660 Madison Avenue; the 761-unit River Crossing at 1940-1966 First Avenue and 420 East 102nd Street; and the Miles and the Parker at 1890 Lexington Avenue and 1990 Lexington Avenue, which together have 405 units.

Urban American, City Investment Fund and others acquired the buildings for $938 million in 2007.

As of 2014, the offering memorandum shows that 95 percent of the apartments are fully market-rate. At the time, about half the apartments were occupied by tenants with “enhanced” or “sticky” Section 8 vouchers, which provide them with a federally supported rent subsidy.

That memo said 1,600 units had already been renovated and that the renovations of all remaining units would increase the portfolio’s net operating income by 25 percent.

A source speculated that the lack of an agreement with the city may have prompted the owners to consider a sale not long after Brookfield came on board.

But a spokesperson for New York City Housing Preservation and Development said the “city engaged the owners of this portfolio, and they weren’t interested.”

Brookfield declined to comment, while Urban American could not be reached.

Savills Studley’s Jeffrey Baker and Graham Moss handled the 2014 transaction.

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