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May.May 18, 2022 05:30 PM

First-of-its-Kind Portfolio of Newly Reconstructed Multifamily Rental Buildings to Hit the Market

In 2017, as renter appetite began to change across the city and the regulatory landscape amassed new challenges for the residential market, Highpoint Property Group took a new approach to multifamily investment. It carefully sought out properties in tax classes 2A and 2B – buildings that are 10 units or less – with an eye towards meticulously reconstructing them from the foundation up to create one-of-a-kind, best-in-class assets that would resonate with a wide variety of discerning renters. Apartments were entirely reimagined and curated with high-end condo finishes, modern technology, high bathroom-to-bedroom counts and private outdoor spaces to offer tenants luxury homes at relatively economical price points when compared to newly constructed multifamily assets.

More than five years later, Highpoint Property Group applied its thesis to nearly 30 buildings, tirelessly assembling a portfolio unlike anything seen in the New York City market. As market fundamentals continue to improve, Highpoint has hired Helen Hwang of Meridian Investment Sales to market a portion of the portfolio for sale. Dubbed the Highpoint Collection, the opportunity features a cohesive set of 20 buildings, totaling 146 units and 392 bedrooms located in the most desirable neighborhoods of Manhattan and Brooklyn, including Chelsea, the East Village and Cobble Hill/Brooklyn Heights, that will provide investors with a first-of-its-kind collection of market-leading multifamily assets.

“Uncovering one asset like this would be a feat in and of itself but uncovering a scalable portfolio of this type of quality across the best neighborhoods of New York City seems like an impossibility,” said Ms. Hwang. “The Highpoint Collection offers investors the ultimate combination of wealth preservation, downside mitigation, generational upside, and diversification that would be an amazing addition to anyone’s portfolio.”

The Highpoint Collection primarily provides large format apartments, the majority of which have private outdoor spaces and many with direct in-unit elevator access. Most of the apartments have at least one bathroom for every bedroom, allowing each of the buildings to equally cater to young professionals, families and empty nesters alike. The high-quality residences feature efficient floor plans that maximize usable space and state-of-the-art technology to minimize operating costs and maximize energy efficiency. Many of the buildings also include a community gym – an amenity space not typically afforded to buildings of this size.

The offering of the Highpoint Collection comes at an interesting inflection point in the commercial real estate market, as even the most institutional investors continue to turn to alternative asset types. While large institutional investors like Blackstone, Starwood Capital and Colony Capital have assembled large portfolios of single-family rental housing across the country, other savvy institutions, including one of the world’s largest and most diversified global investment firms, have more recently targeted New York City’s boutique, tax class 2A and 2B residential market. Comprising of 10 units or less, these buildings provide investors with the long-term upside typically associated with investing in New York City’s residential sector, while limiting future real estate tax increases as proscribed by New York’s tax code. Notably, this classification is the tax code and not an abatement.

While the rents in luxury buildings throughout New York City have begun to rebound over the last year, the market for larger units offers significant room for rent growth, especially given the lack of new supply. Per bed rents throughout the Highpoint Collection, the metric most utilized for analyzing the affordability of larger unit sizes, are more than 30% lower than their luxury, doorman building counterparts. The portfolio presents a unique value proposition given its status as a top-of-the-market alternative that is meaningfully superior to typical boutique or walk-up apartments, but priced at a discount to amenitized, doorman buildings. As a portfolio of newly constructed, virtually all market-rate apartments, the Highpoint Collection will allow an investor to increase rents at inflationary levels without needing to perform any targeted capital improvements.

Helen Hwang, Senior Executive Managing Director of Meridian’s Institutional Investment Sales group, can be reached at (212) 468-5930 or [email protected].


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