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NYC Walk-Up Building Sells at a Discount, Setting Benchmark for New Rules

The sale of a five-story walk-up at 11 Carmine Street may be an indicator of how rent-stabilized properties will be valued in New York.

(Bloomberg)—A small apartment building in Greenwich Village just changed hands, providing an early indicator of the values of rent-stabilized properties under new state rules.

The five-story walk-up at 11 Carmine St. traded Thursday for $11.6 million, a 12% discount from the seller’s last asking price, according to broker Adam Zucker of Christie’s International Real Estate, who marketed the building with Erin Boisson Aries. Three of the property’s 13 units are rent-stabilized.

The deal is one of the earliest to be completed in the two months since New York lawmakers upended the state’s rent regulations, creating uncertainty for landlords. It’s also a signal that investors still have an appetite for such properties -- at the right price.

“For people who like to swim in the opposite direction, it’s a great time to be a buyer,” Zucker said in an interview. “There are a lot of opportunities.”

Sales of Manhattan apartment buildings with rent-stabilized units tumbled after June 14, when lawmakers passed measures severely restricting owners’ ability to raise rates on such properties, effectively putting cap on their market value. There have been 10 deals in Manhattan since then, down from 20 in the same period last year, according to data compiled by David Baruch, an analyst with commercial brokerage Ariel Property Advisors.

‘Getting Calls Again’

Buyers are trickling back into the market now as the details become clearer and they sense an opportunity to acquire an asset at a discount, without a crush of competition, according to Zucker. Properties similar to the Greenwich Village walk-up are being privately shopped around among brokers to gauge possible interest, he said.

“We’re getting calls again,” Zucker said. “People realize this may not be the law forever and, if this is the law for a long time, prices will adjust accordingly.”

The Nocetti Family owned 11 Carmine for more than half a century before deciding to sell their only asset in the neighborhood. Zucker and Aries brought the building, with a commercial space that counts a Dos Toros restaurant as a tenant, to the market at the beginning of the year for $15.5 million. But as talk of rent-rule changes began to swirl around Albany, the brokers responded by lowering the asking price to $13.2 million in April.

Buyer inquiries came flooding in, from as far away as Saudi Arabia and Singapore, Zucker said. Then, as passage of the law became all but certain in June, they stopped. The buyer of the property is a local investor with a “high-risk appetite and a long-term view of New York,” he said.

The deal was completed at price of $1,158 a square foot, according to Zucker. The capitalization rate, a measure of investment yield that rises as purchase prices decline, was 4.2%.

“Right now is an incredibly prime time for this sort of investment buyer to jump in and take control of rent-stabilized buildings,” he said.

To contact the reporter on this story: Oshrat Carmiel in New York at [email protected].

To contact the editors responsible for this story: Debarati Roy at [email protected]

Christine Maurus, Rob Urban

© 2019 Bloomberg L.P.

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