QUEENS, N.Y.—CapRok Real Estate LLC and Douglaston Realty Management Corp., in partnership, has acquired a four-building portfolio in Astoria, N.Y. The prime multifamily building package consists of 143 residential units and 11 ground-floor retail stores.
The acquisition includes 21-80 38th Street, containing 35 multifamily units and 6 commercial units; 21-81 38th Street, containing 24 multifamily and 5 commercial units; 23-05 30th Avenue, containing 42 multifamily units; and 23-15 30th Avenue, containing 42 multifamily units.
The 38th Street properties are located along Astoria’s Ditmars Boulevard, a prime commercial and residential location. The 30th Avenue buildings are just blocks from 31st Street—Astoria’s main hub. The properties are easily accessible by public transportation and are within a 10-minute subway ride to Midtown Manhattan.
“Having had a strong familiarity with the neighborhood throughout my life, the continuous transformation taking place in Astoria has been remarkable,” George Michelis, managing principal of Douglaston Realty Management, said in a statement. “It is amazing to see the neighborhood receive recognition for its restaurants, retail sector and lively nightlife. The desire to live in Astoria is now greater than ever.”
Currently, all but two of the 11 top-tier commercial units are leased by popular retail destinations, including Dunkin Donuts, a grocery store, a laundromat, a beauty salon, a jewelry store and a coffee shop, among others. Due to the prime location of the mixed-use buildings and the efforts of the new owners, leasing offers have already been received for the vacant commercial units.
The residential units are at nearly 100 percent occupancy, with only one of 143 units remaining available. The portfolio contains 24 cooperative apartments and there is strong potential for the sale of these units. CapRok and Douglaston aim to improve the value of these well-maintained properties by commissioning renovations and maximizing layouts on turnover units. The partners are implementing a number of operational efficiency programs to reduce building operating costs, while upgrading the assets in a targeted effort to enhance rental rates—as they have accomplished at other sites. CapRok has a long track record of managing top-tier New York assets and Douglaston operates approximately 1700 multifamily units in and around the Astoria market.
“Astoria and the broader Long Island City market have enjoyed a boom of development and strong absorption over the past several decades,” Michael Psyllos, managing partner at CapRok Real Estate, said in a statement. “The acquisition of this portfolio underscores our company’s commitment to identifying ideally located real estate investment opportunities, where we, along with our partners, can add value. Moreover, our vast experience in the sector and strong relationships with lenders and service providers allow us to overcome obstacles that other competitors cannot.”
According to John Petras, managing principal of Douglaston Realty Management, Astoria has been a phenomenal market for the company. “Astoria is a young and vibrant neighborhood, and is equally as vibrant as an investment opportunity,” Petras said in a statement. “The neighborhood has a Manhattan-type atmosphere with many of the same amenities, at a fraction of the cost. This large portfolio acquisition is a rare transaction for the area and is a great opportunity for long-term growth.”
While real estate transaction volumes typically pick up towards year end, 2012 saw a particular flurry of deal settlements as investors were concerned with the potential for a capital gains tax rate increase of 33 percent. Petras recalls receiving a call on October 25 at 6:30 a.m. from the broker of the Astoria portfolio saying that the seller’s existing deal had fallen through. “The deal was ours, at our offer price, as long as we could close by year end,” Petras noted in a statement.
The principals of CapRok and Douglaston immediately went to work knowing that the seller wanted an executed contract within one week, with no contingencies. The timeline was further stressed when Hurricane Sandy left much of the metropolitan area without electricity. Nonetheless, the deal team pushed forward and the contract was signed on schedule. Thereafter, the sponsors quickly leveraged existing banking relationships to identify attractive financing, and obtained a loan commitment in just a few short weeks, leaving ample time before the ultimate settlement date of December 21, 2012.