Trending
Starwood, AB Capstone developing mixed-use complex in South Bronx Opp Zone
Starwood launched its OZ-focused fund in January
Just four months after the launch of Starwood Capital Group’s Opportunity Zone fund, the firm has found a place to park some of its funds: the South Bronx.
Starwood is teaming up with Queens-based AB Capstone on a 10-story mixed-use development at 425 Westchester Avenue, according to the companies. It’s Starwood’s first announced Opportunity Zone investment.
Zeta Charter Schools will anchor the 147,000-square-foot project, which will also have office space for a non-profit group, retail stores and 11,000 square feet of outdoor space. The architect is Michael Graves Architecture and Design and Hollister Construction Services will be the general contractor on the project.
AB Capstone, headed by Meir Babaev, and Richard Harris, acquired the land, which is now vacant, and an adjacent parcel at 601 Bergen Avenue in 2017 for $7 million.
Starwood said only plans for foundation work have been filed but construction is slated to start this month. A Newmark Knight Frank team of Ron Solarz Jason Shein, Jonny Yuran and Dustin Stolly brought Starwood into the deal. Meanwhile, Transwestern’s Lindsay Ornstein, Stephen Powers and Tom Hines represented Zeta Charter Schools in the transaction.
Starwood kicked off its $500 million Opportunity Zone fund in January — after CEO Barry Sternlicht publicly expressed his dislike of the program. The goal of the program, created by the federal 2017 tax reform, is to incentivize investors to build in designated low-income regions in exchange for tax incentives. Many other investors have been raising funds for such investments.
“As Starwood grows its Opportunity Zone investment portfolio, we will look to capitalize on market opportunities to identify attractive projects and deliver significant value for our investors and to the neighborhoods they serve,” Christopher Graham, the company’s head of real estate acquisitions for the Americas, said in the release announcing the Bronx development.
Starwood’s announcement comes a day after the first-quarter earnings call for Starwood Property Trust, a real estate investment trust that is an affiliate of Starwood Capital. Year-over-year net income fell about 30 percent to $70.4 million, a loss the firm’s CEO attributed to losses in the retail sector.
“The one place where I’ll say there’s trouble is the retail market,” Sternlicht said during the call.