Apollo Real Estate Advisors has followed a growing trend among real estate investors of purchasing rent-stablized apartments in New York City.
To date, the New York-based real estate investment company has purchased close to 9,500 over the last 18 months. After just falling short with Dermot Co. in a joint bid for the 110-building middle-income rental complex in Manhattan known as Stuyvesant Town Peter Copper Village — which eventually sold for a record $5.4 billion — the two announced on Nov. 13 that they acquired an 11-building residential complex with 145 rent-stabilized units near the Columbia University area in Manhattan for $37 million. The properties are in the Morningside Heights neighborhood in Manhattan that is dominated by the Ivy League school. Although the purchase wasn't of the same magnitude of the Stuyvesant Town deal, the smaller transaction completes its objective of making an acquisition of rent-stabilized apartments in an appreciating area in New York City.
Why so much interest for rent-stabilized apartments? They provide a steady flow of income in the near term, which has the opportunity to rise when the rents reach $2,000 a month. At that point, the apartments can be rented out at whatever price the market bears. The downside of rent-stabilized apartments for the owners comes when the apartments are below $2,000 a month, rents can only be raised by a set percentage decided by the New York City Rent Guidelines Board. In September, Apollo had purchased 983 rent-stabilized units for $90 million in the slowly improving East New York section of Brooklyn.— Gerald Magpily
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Calling East New York "slowly improving" is like calling a crackhouse in the South Bronx "a fixer-upper in an up-and-coming neighborhood"