Related Fund Management unloaded five rent-stabilized properties this week in a trade valued at just 45 percent of what they fetched in 2015.
It’s a deep cut — and a growing trend for this asset class.
The Bronx buildings are 100 percent rent-stabilized, according to tax records, meaning there is no shot at raising revenue beyond the inflation-lagging adjustments set by the rent guidelines board each year.
A recent comp sold for just 3 percent of the price it originally traded at. Both of these original deals were inked before the 2019 rent law was enacted, which put a de facto cap on rents and decimated values across the asset class.
More noteworthy: The latest Related deal signals a growing trend for a firm that recently took on a multi-billion dollar portfolio of rent-regulated debt — and it gives some credence to the frustrations smaller rent-regulated landlords have been airing about the 2019 legislation.
A Related Fund Management spokesperson did not immediately respond to a request for comment.
The Related Companies and its affiliated entities have been quietly shedding rent-stabilized buildings in piecemeal deals, often at steep losses. A recent Crain’s analysis found around two dozen such transactions in the past few years.
In one recent example, Related Fund Management let four Prospect Heights properties go for $16 million, almost half off what it paid in 2016.
Related Fund Management, which operates independently from the Related Companies, is not the most prolific owner of rent-stabilized properties in New York City. When The Real Deal last counted in 2019, behemoth Blackstone took the cake with 13,361 units; LeFrak, Cammemby’s and A&E Real Estate Holdings were close contenders.
Still, Related and its various ownership arms are among the largest rental landlords in the city, according to a 2020 count by TRD.
For years, most of the cries that the 2019 legislation has made it impossible to run rent-regulated assets have come from mom-and-pop owners. That is, smaller operators often not taken seriously by tenant advocates and some electeds.
Now, one of the biggest fish in New York multifamily is axing its exposure, too, a move that throws weight behind those claims, whether Related Fund Management means to or not.
Zooming in on the Bronx deal, one bedrooms at the Bronx properties fetched between $1,350 and $1,850 in recent years, according to StreetEasy. That’s a pittance compared to market-rate rents in the borough, which averaged $2,473 in February, according to the Bronx Times.
In the same period that Related Fund Management has worked to whittle down its rent-regulated holdings, it also took on a massive share of the asset class’s debt: a 5 percent stake in failed Signature Bank’s $6 billion rent-regulated portfolio.
The venture won the loans, split between two pools, for 56 and 60 cents on the dollar. The transaction included a $550 million pot of cash to aid workouts on distressed deals, meaning it didn’t take on the risk without some buffer.
As for the Bronx deals, Moshe Greenzweig’s Cedarbridge Management was the buyer. Rosewood Realty Group’s Aaron Jungreis, Ben Khakshoor and Alex Fuchs represented both the buyer and seller. Cedarbridge could not be reached for comment.
This isn’t the firm’s first foray into rent-regulated housing. In 2022, an entity with the same address as Cedarbridge picked up three loans tied to Isaac Kassirer, one of the earliest flameouts on the heels of the rent law.
A month before Signature’s collapse, the landlord took out a loan with the bank for four rent-regulated properties it bought off Sugar Hill Capital, another rent-regulated landlord destroyed by the 2019 law.
Read more
Rent-stabilized building sells for $285K — a 97% value cut
Related offloads Prospect Heights rental portfolio for 50% off
Related, Community Preservation Corp win stake in Signature rent-stabilized loans
