An investment duo from opposite ends of the East Coast nabbed a slice of the multifamily market in Montclair, New Jersey, where local property owners are fighting to stamp out a rent control ordinance and a repeatedly extended rent freeze.
A joint venture between Florida-based Mill Creek Residential Trust and Connecticut-based Cigna Investment Management acquired a 163-unit apartment complex in the Essex County town from Clarion Partners.
The buyers secured a five-year, $54 million loan from French investment bank Natixis to fund the acquisition. The financing was secured by JLL, which also represented Clarion in the sale.
Built in 2009, the complex, at 11 Pine Street, is embedded in downtown Montclair’s melange of theaters, boutiques and galleries. It sits steps from the Bay Street NJ Transit station, which provides direct service to Penn Station. Clarion purchased the property in 2012 for a reported $53 million.
Located 12 miles west of Manhattan, the township’s draw on ex-New Yorkers predated the pandemic-era run on the suburbs.
In 2019, the New York Post dubbed the famously liberal enclave, “the only suburb true New Yorkers will even consider,” noting that its proximity to the city had buoyed property values for the “past several years.”
“Inventory is perennially low and demand is extremely high,” a broker told the Post at the time, adding that the town was seeing “tense bidding situations” and prices were “growing exponentially.”
Local demand intensified this year. Inventory in Essex county had dropped 35 percent year-over-year as of June, Montclair Local News reported.
But in Montclair, a moratorium on rent increases — coupled with a rent control ordinance that landlords are challenging in court — could limit returns on the joint venture’s investment, at least for the time being.
Property records show the deed in the Mill Creek-Cigna deal transferred Dec. 3, at which time the town’s rent freeze was scheduled to expire Dec. 31. But days later, on Dec. 7, the Town Council extended the ordinance through March, Patch reported. Originally implemented in May 2020, the freeze has now been extended by the council seven times.
The Montclair Property Owners Association has said it intends to challenge the freeze in court, in what would be its second filing against the township over rent ordinances.
In April 2020, a month before implementing the rent freeze, the township passed a separate measure that would cap annual rent increases at 4.25 percent. After a challenge from the Montclair Property Owners Association, an appeals court ruled last month that it would allow for a referendum on the question of rent control — essentially voiding the measure unless it can gain the approval of a majority of Montclair voters.