KKR Poised to Buy New Brooklyn Apartment Tower for $240M

A KKR partnership reportedly is closing in a deal to purchase a recently completed apartment tower in Brooklyn in what may become the largest single-asset multifamily trade in the borough this year.

Newmark has been marketing the 327-unit Paxton, a 43-story tower at 540 Fulton Street, on behalf of the seller, NYC-based Jenel Real Estate, which is working with local operator Dalan Management on the pending deal, according to a report in Green Street.

The KKR venture reached an agreement earlier this month on a $240M price for the property, but no deposit was in place, the report said.

The potential deal at that price values the property near the face value of a construction loan that Jenel secured last year from H.I.G. Realty Partners, which provided $240M in February 2022 to finish construction on the Fulton Street tower. The current balance of the construction loan has not been disclosed.

The Paxton, which was completed during the summer, includes 137K SF of office space and about 33K SF of retail in the first two floors of the multistory podium at its base. Most of the office space in the new building, located on floors three through eight and expected to use the address of 532 Fulton Street, is spoken for.

The New York City Department of Health and Mental Hygiene has agreed to a 21-year lease 10K SF on the building’s fifth floor for an early-childhood intervention program, according to Green Street. The US General Services Administration also has agreed to lease 54K SF at the Paxton.

The apartments at the Paxton, located on floors nine through 43, range from studios to three-bedroom units. According to a website for the property, rents for two available one-bedroom units in the tower are $3,930 and $4,100.

Interiors in the building boast high-end finishes, with amenities including a lounge, business center, fitness center, laundry rooms and a rooftop terrace.

The Paxton stands at the intersection of Fulton Street and Flatbush Avenue, about a half-mile south of the Barclays Center. The tower is in proximity for Fort Green Park and Long Island University’s Brooklyn campus.

The largest single-building multifamily deal in Brooklyn this year was Avanath Capital Management’s purchase in January of 7 DeKalb Avenue for $101.3M. The transaction for the 251-unit building, which was sold by the Brodsky Organization in a deal brokered by Newmark, translated into $404K per unit.

The largest overall multifamily deal in Brooklyn was the $150M purchase in May of the 818-unit Sea Park, a three-building complex in Coney Island.