The Arker Companies, a New York-based developer of affordable housing, is making a major property play in the South Bronx. Arker is buying Two Trees Management’s “Morrisania” multifamily portfolio, a 676-unit, 18-property affordable housing package with nearly 675,000 square feet of space, according to a source familiar with the deal.
The neighborhood is enveloped by the Cross Bronx expressway, Southern Boulevard, Webster Avenue, and the retail corridor of 161st Street. The portfolio, consisting of 17 apartment buildings and one vacant lot, commands average rents of $18 per square foot and generates a net operating income of $3.6 million, according to marketing materials from Ariel Property Advisors. Representatives for the brokerage didn’t respond to requests for comment.
The portfolio falls under the U.S. Department of Housing and Urban Development-administered Section 8 program, which assists landlords in providing rental housing to low-income households. It is unclear what Arker is paying for the properties, but a five percent cap rate would value the portfolio at $72 million. A broker active in the area said that Two Trees was asking between $80 and $85 million for the portfolio.
Some of the buildings in the portfolio: the 54-unit 1120 Clay Avenue, the 42-unit 1104 Findlay Avenue, and the 57-unit 1280 Sheridan Avenue. All 18 properties are clustered within a half-mile radius.
Arker, a third-generation family business headed by brothers Sol and Allan Arker, owns a sprawling affordable housing portfolio across the city, with holdings such as the 431-unit Concord Court & Seaside Plaza in Staten Island and the 65-unit Richmond Hill Senior Living Residences in Jamaica. Representatives for the developer couldn’t be reached for comment.
Two Trees, headed by David and Jed Walentas, is best known nowadays as the company behind the Domino Sugar Factory redevelopment in Brooklyn, where 700 out of the 2,300 units will be affordable, and for its large residential portfolio in Dumbo. Representatives for Two Trees didn’t respond to requests for comment.