(Bloomberg)—James Patchett, who stepped down last month as head of New York City’s Economic Development Corp., will take the helm of an apartment investment firm with sights on a buying spree.
Patchett is becoming chief executive officer of A&E Real Estate, a landlord that owns and operates more than 15,000 units. The firm is raising a $1 billion fund to expand its reach across the city, at a time when apartment values are plummeting amid record vacancies and bigger, well-heeled investors are staying away.
“We’re talking about this moment in New York City where institutional capital is scared of New York for the first time in 20 years,” Patchett said in an interview. “And that, to me, is an opportunity.”
The Covid-19 pandemic shuttered offices and cultural life, and sent many New Yorkers fleeing for open space in the suburbs. That, paired with restrictive new laws governing older, rent-stabilized buildings, has dimmed investor appetite for apartments. The dollar volume of multifamily property sales in the city plunged 36% in 2020 from the previous year, according to a report by Ariel Property Advisors. It was the weakest demand in a decade.
A&E, founded in 2011 with the purchase of a distressed 49-unit property in Brooklyn’s Fort Greene neighborhood, has grown through acquisitions, largely from longtime family owners struggling to keep up with the growing costs of maintenance and renovation, said Douglas Eisenberg, the firm’s co-founder and executive chairman.
It’s planning to continue that strategy, while also looking to acquire commercial sites, and parcels with air rights that can be sold to developers.
A&E has so far raised 25% of the $1 billion target, from high net worth investors and pension funds, according to Eisenberg.
“At a moment where other people are running away from New York City,” Patchett said. “We’re running in.”
© 2021 Bloomberg L.P.