As of Wednesday morning, curious investors have a new real estate opportunity: a single mixed-use building at $250 a share.
The four-story office building, located at 286 Lenox Avenue in Harlem with retail space on the ground floor, is launching an initial public offering on Wednesday, according to Crain’s. The building is set to be the first commercial real estate asset in New York City to be publicly traded when it hits the over-the-counter securities market.
LEX Capital Markets, a real estate securities marketplace, is the investment bank and underwriter behind the offering.
The building is owned by Regal Capital Acquisitions, which entered into a ground lease on the property in March 2020 for $10.2 million. It is fully leased to tenants including Wells Fargo, the Child Mind Institute and the Visiting Nurse Service of New York.
None of the building’s tenants missed payments during the pandemic, Crain’s reports.
However, financial reports show $831,000 in losses from March to December 2020. Crain’s reports a Regal executive chalked that up to SEC accounting requirements and claimed the building is cash flow positive.
Regal is hoping to raise $2.15 million by selling 49 percent of an equity stake in order to return funds to private investors, Crain’s reports. There will be 8,600 shares in the property available, which will value it at $11.3 million when debt is included.
The building was previously the site of the Lenox Lounge, a legendary jazz club that counted Miles Davis among its legendary performers. The club shut down in 2012 and the building’s previous owner in 2016 purchased and demolished the site before raising the four-story mixed-use building.
When compared to a real estate investment trust, investing in a single, publicly-traded building is a unique, but risky bet , David Eyzenberg of real estate investment bank Eyzenberg & Company told Crain’s.
“If I’m not a sophisticated investor, I have no way of knowing whether this is a good deal or a bad deal,” Eyzenberg told the outlet. “I can see a lot of pitfalls for investors. You better really understand what you’re doing.”
[Crain’s] — Holden Walter-Warner