Timely Negotiations Protect Asset Value for Seller Amidst Changing Rent Laws
- 145 Henry Street and 15-19 Wyckoff Street | Brooklyn, NY
- 83-Unit Value Add Multifamily
- Henry Street: 43-Unit Elevator Building
- Wyckoff Street: 40-Unit Walk-Up Building
- ~33% Rent Regulated
- ± 66,500 SF Total
- Seller Representation
- Approximate In-Place Cap Rate of 3.2%
- Sale Price: $36,650,000 ($550/SF)
The client was a second-generation owner/operator who wanted to retire and get out of the real estate business.
This assignment began in the midst of discussions regarding the upcoming renewal of the New York rent laws. There was a unanimous sentiment across the market that the laws would move in an unfavorable manner for land lords but the details were still unclear. Many investors decided to take a “wait and see” approach while other’s that remained active seemed to take a drastically more conservative approach. Ownership also leaned to the side of caution and wanted to sell the assets before the rent laws were renewed as it did not seem the market would get better in time. It was vital to her that the ultimate contract to sell the property had no room for the purchaser to exit the deal or re-trade price when the new laws were ultimately determined. The laws were set to change on June 15th which was expected to be in the middle of the closing timeline even with an expeditious process.
About half way through the closing process, news broke of the new rent laws and it was far worse for landlords than anyone had imagined. Multifamily assets in New York lost considerable value in an instant. However, because the seller was prepared with an ironclad contract, the deal closed on time and at full price.
We were ultimately able to work with the seller to negotiate a deal at a slightly higher price and a strong deposit in exchange for a longer closing period. The longer closing period allowed enough time for the seller to exercise the vacate agreements so we could close on the site fully unencumbered.