Massive Harlem Complex Hits Market, Expected To Sell For $400M
The owners of Savoy Park, a sprawling, seven-building affordable housing complex in Harlem, are putting the property on the market and expecting bids of $400M.
Developer Fairstead, along with partners Artemis Real Estate Partners and C-III Capital Partners, is seeking offers for the 1,802-unit property, Green Street reports. Cushman & Wakefield will handle the sale of the complex, formerly known as Delano Village.
Fairstead purchased the property in 2016 for $315M and was joined by C-III and Artemis at a later date. The three owners believe the 93% leased buildings could sell for more now than they did in 2016, when Fairstead bought them from an investor group that included L&M Development Partners and Savanna.
A $400M bid would give each unit a value of $223K, compared to the $175K price per unit when the complex last changed hands. The owners have invested $18M in the property since 2016, installing LED lighting, efficient appliances, water and boiler monitoring, and low-flow fixtures.
Current ownership said a new owner could sell 337K SF worth of air rights on the property and develop more apartments on the 13-acre space, where the complex’s current seven apartment towers stack up 17 stories each. The owner also has the right to apply for a further 1M SF of air rights.
Units are a mix of studios, and one-, two- and three-bedroom apartments, but Green Street reports that bidders are being told that Fairstead has negotiated an amendment allowing a new owner to create almost 600 new apartments by dividing one-bedroom units into studios.
Units in the complex, built in 1959, are all affordable housing, restricted to income levels between 80% and 150% of the area median income — and must remain so under an agreement with city government.
But current owners said this could also be advantageous to new ownership: Savoy Park’s owners don't pay property taxes, instead paying a percentage of the rental income to the city. Its current owners also believe the next owners could raise rents, which reportedly still sit below their possible thresholds.
Affordable housing may be attractive to some prospective buyers, with warnings of a recession around the corner meaning potential instability for market-rate rentals.
