The frozen market just melted.
One of the city’s biggest multifamily landlords just purchased hundreds of Queens apartments in what appears to be the largest acquisition of rent-stabilized apartment buildings since the state’s new rent law passed in June.
Doug Eisenberg’s A&E Real Estate Holdings bought the 539-unit Kestenbaum family portfolio in Rego Park for $129.5 million, sources told The Real Deal.
That represents a 38% discount from the $210 million the seller sought upon putting the properties on the market in February.
The price comes out to $239,425 per unit at a 5 percent cap rate. The portfolio includes 568,276 square feet and buildable space of 238,262 square feet.
B6 Real Estate Advisors’ Thomas Donovan, Eugene Kim, Tommy Lin and Robert Rappa brokered the sale. Aaron Jungreis represented the buyer. Representatives the seller did not immediately respond to requests for comment. Representatives for A&E and the brokerage declined to comment.
The portfolio sits in the heart of the borough at Queens Boulevard and 65th Avenue, about a 30-minute ride from Midtown on the E, M and R subway lines. Roughly 95 percent of the units in the 18-building portfolio are rent-stabilized.
While some smaller rent-stabilized buildings and a handful of larger properties not subject to rent stabilization have traded in recent months, the city’s multifamily market seized up when Albany severely limited increases in regulated rents and virtually banned deregulation of units. Buyers and sellers have since been trying to gauge the impact on the value of rent-stabilized buildings.
The value of multifamily buildings sold in the third quarter of the year totaled $1.1 billion — roughly half of what it was in the same period last year.
The new law drastically curbed landlords’ ability to extract value from rent-stabilized apartments. It eliminated the vacancy bonus, vacancy decontrol and luxury decontrol, and limited to $83 per month the amount landlords can pass on to tenants for individual apartment improvements in buildings with more than 35 units. A ceiling was also created for major capital improvements, restricting landlords to 2% annual increases. Both increases now end when the cost is recovered, unlike the permanent rent hikes possible before.
The changes to the rent law passed despite fierce lobbying on behalf of multifamily landlords, including A&E. A closed-door meeting was held in May with Blackstone, Taconic, A&E, business-group leader Kathryn Wylde and tenant advocates. Eisenberg personally went to Albany to lobby on behalf of his firm, which now controls over 10,000 units in New York City. A&E and Taconic also crafted an alternative rent law proposal, which included an annual rent cap and expanded enforcement measures, but it was never made public.
James Kleimann contributed reporting.