The Real Deal New York

Naftali is angling to buy big UES assemblage for condo tower

Developer teams up with Rockefeller in bid for site with 250K buildable sf: sources
By Mark Maurer and Hiten Samtani | March 22, 2018 04:40PM

Jason Muss, Miki Naftali and the buildings at 1461-1469 Third Avenue

As the city’s investment sales market appears to rebound, Miki Naftali is accelerating his assemblage moves.

For its next luxury condominium project, Naftali Group is attempting to acquire a large development site with more than 250,000 in gross buildable square feet in the Upper East Side’s Yorkville neighborhood, The Real Deal has learned. The site, which consists of six low-rise buildings at the southeastern corner of East 83rd Street and Third Avenue, belongs to Muss Development and the Aryeh family.

Sources familiar with the negotiations said Naftali has brought on Rockefeller Group as an equity partner. However, the deal, which would be for the six buildings and neighboring air rights, is not yet in contract.

According to Naftali-branded marketing materials for an equity partner, the as-of-right zoning supports a roughly 250,000-square-foot high-end residential condo tower with a retail base. The retail frontage would span about 100 feet on Third Avenue and about 100 feet on East 83rd Street, the documents show.

The price for assemblage was not immediately clear, but sources said the site was most recently asking $700 to $750 per buildable square foot. (At 250,000 square feet, that would bring the price to around $180 million.) Two other sources said the sellers were seeking closer to $1,000 per buildable square foot just a few weeks back.

Naftali expects the ground-up project’s equity will total a little over $130 million, while the capitalization would be somewhere in the range of $375 million, the materials show. (The allotted debt would then be nearly $250 million.)

Projected net income is pegged at nearly $175 million. About 70 percent of the project’s total space would be residential condos.

The development lots are located at 1461-1469 Third Avenue and 204 East 83rd Street, and the air rights would come from two buildings at 1453-1455 and 1459 Third Avenue at the corner of East 82nd Street. Existing retail tenants include Japanese restaurant Sushi Para, women’s clothing store Mixology Clothing Company and Irish bar Gael Pub.

In addition to already securing a partner, Naftali has performed an environmental review on the site, sources said.

A Cushman & Wakefield team led by Bob Knakal has been marketing the property for sale.

Representatives for Naftali, Muss and Cushman declined to comment. Mitsubishi Estate Company subsidiary Rockefeller, which is planning a 46-story condo tower in NoMad, could not be reached.

Naftali, after a two-year quiet period with little acquisition activity, is also close to finalizing an assemblage on Madison Avenue, between East 79th and 80th streets. The firm has bought three of the four buildings so far and is negotiating to add air rights.

Muss sold another one of its Upper East Side sites — at East 88th Street and Third Avenue — in 2013 to DDG for $70 million, or about $540 a buildable foot.