The Rabsky Group sold one of its large Williamsburg multifamily buildings for $130 million to Denver-based landlord UDR, which is buying at a time when several large apartment REITs are retreating from the New York market.
UDR, which already owns about half a dozen properties in Manhattan, closed on the 188-unit Leonard Pointe building in North Williamsburg on Wednesday, sources told The Real Deal.
The purchase price of $132.2 million works out to more than $700,000 per unit.
The Colorado-based real estate investment trust, which has a market capitalization of $12.3 billion, made the purchase at time when competitors such as Equity Residential and AvalonBay Communities are limiting their exposure to the New York City market over concerns about a glut of new apartments.
On UDR’s fourth-quarter earnings call Thursday, company chief financial officer Joe Fisher said the firm is taking a long-term view on the New York City market.
“While it has lagged of late from a regular standpoint given the supply picture, we are starting to see that come off. New York will be probably a little bit higher next year in terms of supply, but this is not a one-year trade for us. We are thinking about the next five to 10 years,” he said. “We are looking to get more dollars put to work in that market.”
A representative for Rabsky Group could not be immediately reached for comment. Savills-Studley brokers David Krantz and Paul Leibowitz negotiated the off-market deal on behalf of the buyer. The brokers declined to comment.
Simon Dushinsky’s Rabsky Group developed the seven-story, 140,000-square-foot apartment building at 395 Leonard Street in 2015. The property has a 25-year year 421a tax exemption that fully abates taxes through 2036 before expiring in 2040.
The benefit amount is valued at $18.6 million over the life of the exemption, according to records with the city’s Department of Finance.
Rabsky purchased the site adjacent to the Brooklyn-Queens Expressway a few blocks from Bryant Park in 2012 for $18 million. Dushinsky developed the building – one of at least a dozen properties the company’s developed in North Brooklyn in recent years – with financing from PNC Bank.
Rabsky in 2015 took out the PNC debt and replaced it with a $95 million loan from TD Bank, and earlier this year refinanced property again with an $88.2 million mortgage from Berkadia.
Dushinsky’s firm, which is one of the most prolific developers in Brooklyn, infrequently sells its stabilized properties.
The sale was negotiated at a time when the market still believed that the L Train subway between Brooklyn and Manhattan would be shut down for 18 months starting this spring, before Gov. Andrew Cuomo last month announced a plan to keep the line partially open during repairs.
UDR chief investment officer Harry Alcock said the company underwrote the deal expecting the worst-case scenario for the L.
“Our initial underwriting contemplated the L train stopped entirely,” he said on the company’s earnings call. “Today, we are well aware of the circumstances which should be positive.”
UDR entered the New York market in 2011 with its purchase of the 493-unit 10 Hanover Square in the Financial District for $260.8 million.