Stonehenge are smart investors in NYC multifamily. They have a talent for buying undervalued or underdeveloped property and putting the work into it. One only has to look at their plans for 555 6th Avenue to see that Stonehenge creates value through transformative investment in clever acquisitions. They are one of the few firms that we at Cubed Advisory have heard talk up the merits of rent stabilized tenants as a future arbitrage.
So what are they doing with their seemingly expensive purchase of 364 West 18th? There are few facts in the Full Story below (5th item down) outside of $35M sale price for 65 residential units. So let's pad some out some more facts:
-65 residential units with 7 commercial units = $486k/ unit ($376k adjusted for weighted commercial)
-57706SF with no available FAR = $606/SF
It all adds up to some pretty thin margins, especially with average residential rents of $2800/mo, but therein lies Stonehenge's basis. Minor renovations could easily push average rents up 30%, more if some of the retail was reclaimed for amenity space. Speaking of retail, it is safe to assume that with a barber shop, check cashing store, deli and candy store- retail is also sub market rate.
Stonehenge clearly didn't buy low, especially with the amount of work to be done, but their history of long term holding of assets means that there will always be a future opportunity to sell high.
Labels: Chelsea, multifamily, repositioning, Stonehenge