One of the brave few to buy rent-stabilized buildings in recent years is diversifying with a more moderate-risk bet. At least, that’s the hope.
Aya Acquisitions, headed by Amir Shriki, paid $45 million for Renoir House, a mostly market-rate rental building at 225 East 63rd Street on the Upper East Side, according to Ariel Property Advisors.
Shriki, who founded the firm four years ago, is eyeing a value-add plan, according to the brokerage, and financed the deal with a $34 million loan arranged by Ariel’s Matthew Dzbanek and Matt Swerdlow.
Neither Shriki nor Aya’s acquisitions head Mor Bullis returned requests for comment.
Last year, the upside at Renoir House would have been clear: Market-rate rents were hanging near record highs and the city’s vacancy rate was at a 55-year low, a perfect environment for landlords to raise rents on lease renewals or renovate if tenants moved out to avoid the price hike.
Then, in April, Albany passed good cause eviction, muddling the path to those profits.
The law limits evictions, requires lease renewals citywide for tenants who are current on rent and puts a de facto cap on rent increases above 10 percent. (Tenants have a defense against such a hike in housing court.)
That means landlords have fewer chances to turn units and less runway to raise rents.
At Renoir House, that makes value-add a challenge. The 152-unit building is 80 percent market-rate, meaning Aya can legally hike the rent on most leases. But at the moment, everything seems to be occupied. StreetEasy lists no available apartments.
For Shriki to upgrade units, he’ll need to play the waiting game until renters move out.
The investor is no stranger to a long-term hold strategy, though, having closed on a handful of rent-stabilized deals since 2021.
Landlords of rent-regulated properties are effectively blocked from raising rents above the adjustments approved by the Rent Guidelines Board, hikes that almost always lag inflation. The mismatch has dragged entire portfolios underwater and forced fire sales.
The investors picking up the pieces are doing so on a bet, hoping the state legislature rolls back the rent law in some capacity, and they’re buying at a low enough basis that they can wait out that change.
Aya, for example, picked up 120 and 125 Riverside Drive in February for 64 percent below the 2013 purchase price. It plans to hold the buildings, which are over one-third rent-stabilized, for 10 years minimum, Shriki told Pincus.
“Sentiment may be negative toward buildings like these,” PH Realty head Peter Hungerford said after closing on the $180 million purchase of a rent-stabilized portfolio with Alma Realty and Rockledge CRE. “But I think at some point, in some way, that it is going to change.”