NYC’s tallest rental tower sees low profits amid big concessions

Brookfield’s Eugene is 74% leased, but concessions hurt bottom line

TRD NEW YORK /
Feb.February 08, 2018 01:32 PM

Manhattan West development (Credit: Brookfield)

 

UPDATED, Feb. 8, 3:28 p.m.: Leasing at the Eugene, the first completed ground-up tower at Brookfield Property Partners and Qatar Investment Authority’s Manhattan West megaproject, launched to great fanfare in March. But almost a year later, the $800 million, 844-unit building’s revenues are off to a slow start.

The rental tower at 435 West 31st Street contributed just $1 million in funds from operations — a common measure of real estate investment trust earnings — in the fourth quarter, Brookfield’s real estate CFO Brian Davis said during an earnings call Thursday. That’s a far cry from the $10 million Brookfield expects the tower to make annually once stabilized.

“Proceeds from operations are of course less than when fully stabilized and they are in line with projections (unlike leasing, which is ahead of projections),” a company spokesperson told TRD.

Seventy-four percent of the tower’s market-rate units are leased, according to a Brookfield spokesperson, up from over 60 percent in October. During the earnings call, Brookfield said the tower was 65 percent leased, but the spokesperson subsequently told The Real Deal that the number referred to the entire building, including affordable units.

According to StreetEasy, units at the Eugene are no-fee and come with two months free rent on a 14-month lease and three months free rent on a 27-month lease. A surge of new supply over the past two years has pushed rents down and concessions up across the city. Landlord concessions, which often come in the form of free rent, reached a new record for the fourth consecutive month in January, according to a new report by appraisal firm Miller Samuel released Thursday. On average, Manhattan landlords in January offered 1.4 months of free rent, according to the report.

The 62-unit tower is the city’s tallest rental-only apartment building. Brookfield funded the tower, which is 20 percent affordable, with $479 million in bonds backed by the New York State Housing Finance Agency.

Australian coffee shop Bluestone Lane occupies the building’s retail space. It was closed for about a week in late November because the wrong address was filled in on the certificate of occupancy application.

Correction: The article has been updated to clarify that 74 percent of market-rate units have been leased.


Related Articles

arrow_forward_ios
Web searches for terms including “homes for sale” are way down up north. (Credit: Pixabay)

Fewer Canadians are searching for homes online amid pandemic

Massive stimulus package has limited upside for real estate

Massive stimulus package has limited upside for real estate

About 450 sellers pulled their listings last week (Credit: iStock)

As New York shut down, so did its resi market

Is REBNY and StreetEasy’s decision a much-needed reprieve or data manipulation? (Credit: Pixabay)

Decision by StreetEasy, REBNY to stop market clock triggers debate

The Atelier at 635 W. 42nd Street and 70 Charles Street (Credit: Google Maps)

One of NYC’s priciest listings to appear on the market last week is already in contract

Jacqueline Friedman Brogadir and 993 Fifth Avenue, 10th Floor (Credit: Brown Harris Stevens, Patrick McMullan/Patrick McMullan via Getty Images)

Daughter of Goldman exec nabs Fifth Avenue co-op for $25M

Clockwise from top left: Halstead’s Diane Ramirez, Douglas Elliman’s Howard Lorber, Corcoran Group’s Pam Liebman and Brown Harris Stevens’ Bess Freedman (Credit: Getty Images; iStock)

Tension lingers over showings as brokerage chiefs navigate pandemic

(Credit: iStock)

REBNY orders days on market calculation to stop for resi listings

arrow_forward_ios
Loading...