Avanath Acquires NYC High-Rise for $101M
Part of a major mixed-use property, the Brooklyn building was purchased from The Brodsky Organization.
Avanath Capital Management has expanded its Brooklyn, N.Y., portfolio with the off-market purchase of 7 DeKalb Ave., a 251-unit multifamily property, from The Brodsky Organization for $101.3 million.
Located in downtown Brooklyn, the 18-story high-rise community is part of City Point, a 700,000-square-foot mixed-use development and the largest single-structure mixed-use development in New York City.
The property was purchased with equity from Avanath’s Renaissance Fund and is aligned with the firm’s mission to develop, own and operate communities in growing submarkets that provide quality housing to residents of all income levels, according to Daryl Carter, founder, chairman & CEO of Avanath, an Irvine, Calif.,-based private real estate management company.
The Brodsky Organization was represented by Newmark. The acquisition involves the assumption of a loan provided by Fannie Mae and Wells Fargo.
Carter said in a prepared statement the purchase provided an excellent opportunity to add a high-end apartment community to the firm’s portfolio, which enables Avanath to offer quality housing to residents who might otherwise be priced out of the neighborhood. He said the property has a mix of units for households with 40 percent area median income, 50 percent AMI, 130 percent AMI and market-rate apartments.
7 Dekalb has a walk score of 99, a transit score of 100 and several food, shopping and entertainment options. Carter noted the property also is well constructed and highly amenitized. Based on the location and property features, Carter said he is confident the asset will see strong consistent cash flow from high demand and retention of residents in the affordable and market-rate units.
The asset has an existing LEED Silver certification and the new owners expect to enhance the energy efficiency of its operations in partnership with ReTech Advisors. John Williams, president & CIO of Avanath, said in prepared remarks the firm will also implement social programs that will be selected after an assessment of residents’ needs. Examples already in operation at other Avanath properties include youth and afterschool programs, personal and professional development workshops, health classes and community social events.
The property has a fitness center, children’s playroom, tenant lounge, cinema center, large outdoor deck and ample storage space. Retail tenants at City Point include Trader Joes, Target, Primark, Lululemon and several dining options inside the DeKalb food hall. 7 DeKalb is within walking distance of 12 subway lines and numerous bus lines.
Earlier Brooklyn deal
Last May, Avanath bought the 303-unit 38 Sixth and the 298-unit 535 Carlton multifamily properties for a total of $314 million from Greenland USA. The properties are adjacent to the Barclays Center and part of the ongoing Pacific Park New York Development project, Brooklyn’s largest development to date. When complete, the project will have 8 acres of public open space, a public middle school, 15 residential buildings and more than 7.3 million square feet of residential, commercial and retail space. The two properties also have ground-floor retail space.
Williams said 7 DeKalb is approximately a half-mile from the Barclays Center and the two apartment communities purchased last year. Avanath Communities Inc. will manage all three properties totaling 852 units. Williams said the firm expects the assets to benefit from operational efficiencies that will be enhanced through economies of scale. He said that could further contribute to future cost savings and investment upside.
Keith Harris, Avanath’s executive vice president of acquisitions, said the firm continues to be drawn to high-quality assets in Brooklyn, which is the fastest-growing borough of any city and has experienced a 9.2 percent population increase since 2010. Harris said in prepared remarks Brooklyn has seen job growth in that time that is reflected in the borough’s diverse job market, which includes healthcare, education, retail and technology and drives demand for quality housing.