Fairstead Capital is in contract to buy the 1,790-unit rent-stabilized apartment complex Savoy Park in Harlem from an investor group that includes L+M Development Partners and Savanna, The Real Deal has learned.
Market experts uninvolved in the transaction said they expected the deal to be valued at north of $300 million, or close to $175,000 per unit. The 10.5-acre complex holds seven 16-story properties and is entirely rent-stabilized.
Fairstead, a Midtown West-based investment firm led by veteran CBRE broker Stephen Siegel, Andrew and Jeffrey Goldberg, and Will Blodgett, plans to operate the complex under its current regulatory agreement, which it said “will ensure its long-term affordability.”
“Fairstead is committed to preserving affordable housing at Savoy Park and continuing to improve the property and quality of life for all of the residents of this important community,” a spokesperson for the company told TRD. “We are excited to build on the innovative preservation efforts of the current owners which put deregulated units back into rent stabilization and provided additional affordability protections by way of rent and income caps over a 40-year period.”
In November, the owners started shopping around a stake in the project through Savills Studley, as TRD reported. The offering memo, downloadable on TRData, indicates that 800 of the units are ripe for pricey renovations, allowing ownership to increase monthly average rents by $912, for a future gross potential rent increase of $9 million annually. A spokesperson for the complex said at the time that “rents will not be dramatically increasing any time soon” and that the so-called “value-enhancement plan” would take “decades to achieve.”
In 2012, L+M, Savanna and partners paid $210 million to pull the rent-stabilized buildings, located from 139th Street to 142nd Street between Fifth and Lenox avenues, out of foreclosure. At the time, the city made a deal that saved Savoy Park about $2.4 million a year in real estate taxes through a tax abatement. The owners then restructured the debt and extensively renovated the complex, which was built as Delano Village in the late 1950s.
“We are proud of the work we have done to stabilize Savoy Park and preserve affordability after acquiring the complex while it was in a state of severe financial distress,” L+M and Savanna said in a statement Thursday.
The deal is expected to close in the next two months. Both Fairstead and the sellers confirmed the deal, but declined to disclose the price.
A Savills Studley team led by Jeffrey Baker and Graham Hobbs is representing the sellers, while Ariel Property Advisors’ Victor Sozio is representing the buyer. Representatives for the brokerages declined to comment.
Fairstead is increasingly a multifamily force in New York City, and is now making a push to ramp up its affordable housing holdings.
About 20 percent of Fairstead’s 5,000-unit New York City rental portfolio is rent-stabilized. In September, Fairstead partnered with the Blackstone Group in a $690 million acquisition of the 24-building Caiola portfolio, and is in contract for two Central Park North buildings for $48 million.
The deal follows two high-profile purchases of Manhattan rent-stabilized complexes in recent months: Stuyvesant Town-Peter Cooper Village for $5.3 billion and the Riverton in Harlem for $201 million.