Investor Buys New Jersey Apartments for $24M, Plans Redevelopment
- Oct 08, 2010
Dees Stribling, Contributing Editor
New York–Phoenix Realty Group (PRG) has bought 548 distressed rental units for $24.2 million in East Orange, N.J. The properties are all located within a one-mile radius of each other, and mostly date from the 1930s. PRG plans to renovate them.
Purchased on behalf of a PRG institutional real estate fund, the East Orange portfolio consists mostly of multistory buildings with one- and two-bedroom units. Rents and occupancy are low compared with other apartment buildings in the market, according to PRG, and its redevelopment plan will include unit and management improvements to achieve market-level rents.
The buildings will be improved and operated by TreeTop Development L.L.C., which has considerable experience in redeveloping apartments in emerging New Jersey neighborhoods. The plan calls for multimillion-dollar capital improvements that will include new landscaping, upgrading lobbies and common areas, as well as modernized elevators, new roofs, entryway doors and building systems on certain buildings.
East Orange is a city in Essex Country near Newark and Elizabeth, NJ. Since it has a direct commuter rail connection to Penn Station in Manhattan, the company believes that these properties will be attractive to these who work in Manhattan after they are brought up to more contemporary standards.
“It’s a good time to invest in older properties because of the opportunity to add value that yields attractive returns,” Keith Rosenthal, co-founder and president of Phoenix Realty Group, tells MHN. “We’re always looking for apartments that are well located and priced right because they can be purchased with fixed-rate, low-interest financing. And we are meeting a growing demand at a time of short supply.”
Toward that end, Rosenthal adds that the company is actively investing in value-add multifamily properties and pursuing joint-venture development of new multifamily projects in the Tri-State region and southern California, tapping $400 million in institutional fund capital targeted for those areas. The firm currently owns and manages market-rate apartment properties in major markets across the U.S.