Morgenstern, Kaye make first buy as Stone Street Properties

Sep.September 01, 2011 03:44 PM

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From left: Robert Morgenstern and Sabrina Kleier-Morgenstern

Long-time friends Robert Morgenstern and Jeffrey Kaye had often thought about leaving their respective jobs and going into business together. Morgenstern, a real estate broker, and Kaye, a vice president at the Gotham Organization, dreamed of starting a real estate investment firm, and as 2010 drew to a close, they felt the time was right.

“Nothing had been trading for months prior, and suddenly things started to move,” said Morgenstern, who is married to broker and “Selling New York” star Sabrina Kleier-Morgenstern. “We had access to some off-market deals. We could get them done where no one else could.”

In January, they launched Stone Street Properties. Named after historic Stone
Street in the Financial District, the new company will own, operate and manage multi-family buildings. Last month, Stone Street closed on it first acquisition, paying $32.6 million for 85 residential units in three West Village rental apartment buildings: 7 Cornelia Street, 11 Cornelia Street and 102 Christopher Street. The goal is to launch a line of high-end buildings, branded as being part of the Stone Street portfolio.

“We’re taking these under-managed, under-serviced buildings and creating a luxury brand,” said Kaye, who managed development projects and cultivated new business while at Gotham.

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Jeffrey Kaye
Morgernstern, formerly a Wall Street money manager, studied for his real estate license alongside Sabrina while the two were dating. In 2005, they both started working at Gumley Haft Kleier, her parents’ firm.

Now, Morgenstern and Kaye are bringing together their collective expertise to upgrade and renovate their newly purchased properties. The Christopher Street property, a six-story walk-up building with one- and two-bedroom units, will get a roof deck, Morgenstern said. They will also upgrade technology in the buildings, allowing prospective tenants to apply online and residents to pay their monthly rent by credit card.

With four employees and a small office on the 36th floor of 599 Madison Avenue, Stone Street is preparing to expand rapidly. Another big-money transaction is expected to close in the next few weeks, Kaye said, so the firm should have close to 400 units under management by the end of the month. The company aims to have 10 employees by the end of the year and 1,000 apartments by next year, Kaye said.

There will be no direct relationship or exclusive arrangements between Stone Street and Gumley Haft Kleier, but Morgenstern said he hopes the brokerage will bring some renters to his new properties. “You can’t go wrong with the locations on Christopher and Cornelia Street,” Sabrina said, noting that the area has some sentimental value for the pair. “In fact, our first date was on Cornelia Street.” She added: “I know with Stone Street’s business plan, the apartments will be fabulous. And who knows, there might be a Selling New York episode here!”

This is an expanded version of the story that ran in the September 2011 issue of The Real Deal.

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