NEW YORK CITY-As residential activity continues to boom in Lower Manhattan, the strength of Downtown’s emerging 24/7 live/work community prompted developer Africa Israel USA to sell a 352-unit luxury TriBeCa rental apartment building at 88 Leonard St. to Chicago-based Waterton Associates. The deal is currently in contract and will close by February 2012, says Tamir Kazaz, CEO of AFI USA.
“It’s a great opportunity for Waterton to buy this building, and for our point of view as developers, we will continue to look for opportunities to build more buildings like 88 Leonard,” Kazaz tells GlobeSt.com, who lauded Waterton’s “tremendous management experience” of multifamily properties throughout the US. “It will continue to increase the value of this property.”
The sale of the building itself will be broken down in two stages, Kazaz says. In the first phase, AFI USA will sell 49% of its membership interest in 88 Leonard to Waterton for $37 million, which is expected to close within 60 days, according to public filings. In the second phase, AFI will transfer the remaining 51% interest in the apartment building in return for $17 million, plus the pay down of a $24 million mezzanine loan and the assumption of the $132 million long-term Liberty Bonds secured by the building, public filings show.
After closing costs and taxes, AFI will net approximately $47 million from the transaction and will realize around $14 million of profit in its financial statements, according to the company. Kazaz says selling the building comes “at the right time” considering the high demand for residential space in the Downtown market as office construction continues at the World Trade Center redevelopment site and World Financial Center. “Rentals will increase significantly in Lower Manhattan,” he says. “It is definitely a great neighborhood. We found that rent prices went up significantly in the past 12 months. We think it will continue to increase.”
The building was completed in 2007 and is 100% occupied. Laurie Golub, general counsel and managing director of business affairs of AFI USA and Windels Marx Lane Mittendorf, LLP, represented AFI USA in this transaction; Greenberg Traurig, LLP represented Waterton Associates. Helen Hwang and Nat Rockett of Cushman & Wakefield’s New York Capital Markets Group were the brokers involved in the marketing and sale of the site.
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