Big portfolio sales grind to a near halt in 2019

The year’s 5 biggest deals represent a dramatic drop-off from the previous year

TRD New York /
Dec.December 31, 2019 08:00 AM
3333 Broadway and L+M’s Ron Moelis (left) and A&E Real Estate Holdings principal Douglas Eisenberg and the 539-unit Kestenbaum family portfolio in Rego Park (Credit: L+M, StreetEasy, The Rego Park 18 Portfolio)

3333 Broadway and L+M’s Ron Moelis (left) and A&E Real Estate Holdings principal Douglas Eisenberg and the 539-unit Kestenbaum family portfolio in Rego Park (Credit: L+M, StreetEasy, The Rego Park 18 Portfolio)

It was anything but a banner year for large portfolio sales. Generally driven by big multifamily packages, the market took a big hit this year as investors sat on the sidelines while Albany hammered out new rent laws.

The five biggest portfolio sales of 2019 totaled just $1.6 billion — less than half of the $3.4 billion tallied by the top five deals of 2018.

1. Putnam Portfolio | $1.2B
Buyer: L+M Development Partners, Invesco Real Estate
Seller: Brookfield Asset Management, Urban American
Brokerage: Cushman & Wakefield

Ron Moelis’ L+M teamed up with Invesco to buy five former Mitchell-Lama developments in Manhattan’s Roosevelt Island spanning 2,800 units. As part of the deal, the new buyers struck regulatory agreements with the city to return more than 1,800 of those units to long-term regulation.

L+M and Invesco financed the deal with an $823 million loan from Wells Fargo.

Brookfield purchased a majority stake in the portfolio for $1.04 billion in 2014.

2. Kestenbaum family portfolio | $129.5M
Buyer: A&E Real Estate
Seller: Kestenbaum family
Brokerage: B6 Real Estate Advisors

In the first major deal since the new rent law passed in June, Doug Eisenberg’s A&E Real Estate Holdings set the new benchmark for the multifamily market when the firm paid nearly $130 million for a large rent-stabilized portfolio in Rego Park, Queens.

The 539-unit portfolio sold for roughly 38 percent less than it had been asking when it hit the market earlier in the year.

3. Brooklyn/Queens portfolio | $115M
Buyer: Parkoff Organization
Seller: Morris Weintraub Associates
Brokerage: Marcus & Millichap

In January, the Parkoff Organization closed on a deal it inked back in 2018 to buy five multifamily buildings spread across Brooklyn and one in Queens. The buildings were built in the 1930s and 1940s and had been under the ownership of the Weintraub family since the late 1960s.

About 97 percent of the 424 units were rent stabilized at the time of purchase.

4. 140-60 Beech Avenue, 140-30 Ash Avenue in Queens | $80M
Buyer: Zara Realty
Seller: Ilias Theodoropoulos
Brokerage: Meridian Investment Sales

Queens-based investor Zara Realty purchased these two buildings spanning 266 units, which it plans to hold as long-term assets.

Ken Subraj’s Zara Realty was accused earlier in the year of violating New York’s rent stabilization laws and harassing tenants with illegal broker fees, rent increases and late fees, according to a lawsuit filed by Attorney General Letitia James’ office.

A spokesperson for Zara said many of the allegations contained in the suit are factually inaccurate and are being “vigorously contested.”

“The facts are that Zara purchases older buildings, many with a history of neglect by prior owners, and invests in new infrastructure and other improvements and amenities, creating thousands of high-quality affordable housing units,” the spokesperson said. “As a company founded in Queens by immigrants over 30 years ago, we are proud that the turnover rate among rent-regulated tenants in Zara buildings is low and we have never sold a building we purchased in Queens.”

The company is a major owner in southeast Queens, with holdings in Jamaica and Elmhurst.

5. Harlem portfolio | $76.25M
Buyer: Black Spruce Management, NYC Housing Partnership
Seller: E&M Associates
Brokerage: Westwood Realty Associates

Irving Langer’s E&M Associates sold this 21-building portfolio with 224 residential units and 30 retail stores for more than $76 million. The properties span three city blocks, mostly along Adam Clayton Powell Boulevard.

E&M, one of the city’s largest multifamily owners, purchased the properties for $66.7 million in 2014 from Denver-based real estate investment trust AIMCO. Isaac Kassirer was previously in contract to buy the portfolio for $85 million, but the deal ultimately fell through.

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