Long Island Multifamily Portfolio Changes Hands for $473M

Fairfield Properties, with a $100 million preferred equity investment from FCP, acquired the seven properties from Lone Star Funds.
Westwood Village

Fairfield Properties, already the largest multifamily owner and operator in Nassau and Suffolk counties in Long Island, N.Y., has further expanded its local footprint by acquiring a seven-property, 1,496-unit portfolio for $472.5 million. FCP, a Chevy Chase, Md.-based privately held real estate investment company, made a $100 million preferred equity investment as part of the acquisition. The seller was Lone Star Funds, according to Yardi Matrix data.         

The CBRE team of Jeffrey Dunne, Gene Pride and Eric Apfel, along with Alexander Virtue of CBRE Capital Advisors, represented the seller and also procured the buyer. The CBRE New York City and Mid-Atlantic Debt and Structured Finance teams, including David Webb, Maxi Leachman and Brynn Wendel, advised the buyers on the senior debt and preferred equity placement. Freddie Mac and Citibank provided senior loans for the acquisition.

The transaction was FCB’s first investment in the Long Island market with Fairfield Properties.

“This investment continues FCP’s strategic initiative to expand its structured investment business by providing preferred equity on existing multifamily assets,” E.J. Corwin, FCP senior vice president, said in a prepared statement.

Mid Island

“There was incredible interest in the properties, as this class of ‘workforce housing’ is in high demand because of a shortage of quality Class B apartments and the slow pace of new construction on Long Island. These factors created an opportunity for astute investors, like Fairfield Properties, to capitalize on strong market fundamentals,” CBRE’s Dunne said in prepared remarks. “Fairfield Properties is already the largest owner of apartments on Long Island and this acquisition significantly adds to their portfolio.”

Strong Portfolio

CBRE noted that the portfolio of properties—constructed from the early 1950s through mid-1970s—was “assembled on a cohesive investment thesis of buying high-quality, Class B assets in markets with high barriers to construction, access to diverse employers and strong school systems.” Improvements made over the years kept the assets in overall excellent condition for their age, resulting in higher-than-average occupancy, continued rent growth and resident retention.

Gary Broxmeyer and Michael Broxmeyer, managing partners of Melville, N.Y.-based Fairfield Properties, said they still plan to make upgrades to both interior spaces as well as exterior common areas throughout the portfolio.

“The locations fit perfectly into our portfolio. We look forward to upgrading them to the Fairfield Standard so we can provide a premier level of service to the residents,” they said in a prepared statement.

The Fairfield Properties web site indicates the assets have already been renamed and rebranded.

At the time of acquisition, the properties’ names and locations were:

  • Westwood Village, 242 units, Westbury, N.Y.
  • Heritage Square, 80 units, East Meadow, N.Y.
  • Cambridge Village, 82 units, Levittown, N.Y.
  • Yorkshire Village, 40 units, Levittown
  • Mid-Island Apartments, 232 units, Bay Shore, N.Y.
  • Southern Meadows, 452 units, Bayport, N.Y.
  • Lake Grove Apartments, 368 units, Lake Grove, N.Y.

The apartment communities are two-story, garden-style properties, mostly with one- and two-bedroom units. Some of the larger properties—like Westwood Village and Southern Meadows—have community amenities including swimming pools, fitness centers and clubhouses. Westwood Village, which also has some three-bedroom units, has rents ranging from $2,500 to $3,470 with an average rent of $2,942 per month, according to Yardi Matrix. Rents at Southern Meadows last year ranged from $1,472 to $2,135 with an average of $1,824. Cambridge Village, a smaller property with one- and two-bedroom floorplans, had rents ranging from $1,968 to $2,757 with an average of $2,259, Yardi Matrix reported.

Just last month, FCP expanded its multifamily holdings in Georgia. The company paid nearly $30 million Chroma Park, a 210-unit garden-style gated community in Austell, Ga., roughly 19 miles from downtown Atlanta.

Images courtesy of CBRE