New York Annuities to Fund $ 250 Million Apartment Venture


There is no time like this for New York pension funds to invest in new homes.

The two largest pension schemes – public school teachers and municipal employees – work with developers Hudson Cos., To provide $ 250 million to build middle-income homes in the city and surrounding suburbs, the developer said.

The annuities will provide $ 243.75 million of that equity, which will be used to build up to 10 projects or 2,000 units, said Joe Riggs, principal at Hudson. The partnership has so far identified two potential locations, one in Brooklyn and one in Westchester County.

“The time is always right to start building new homes – especially homes that are affordable,” Riggs said. “We see the opportunity to acquire development sites on a reasonable basis for the first time in a long time.”

New York City is known to have high rents plunged during pandemic as workers stay away and find little reason to pay a premium to live near the office. The price declines make urban housing construction stronger accessible to tenants with less resources, but they have also dampened developers’ enthusiasm for planning new projects in line with the market. According to Riggs, this is an opening for those looking to build affordable units.

“Land is cheaper than it has been in many, many years because the rental market is suffering,” he said. “Our investment strategy is not based on booming rents, which is why we feeling It’s good to keep going even with this headwind. “

According to the terms of the contract, the joint venture must use at least 70% of the funds for the construction of new apartments. The rest can be used to purchase and renovate existing units. Projects can range from all rentals to lower-priced cooperatives and condominiums, Riggs said.

For the rental, the partners plan to develop, manage and generate income from the properties for around 10 years prior to the sale. For projects in New York City, roughly 30% of the units would likely be rated affordable for middle-income renters, with the remainder at market prices – a balance traditionally used to make them profitable, Riggs said.

The partnership “creates an innovative new fund to deliver solid financial returns for our pension systems while developing important new homes across the region,” said Yvonne Nelson, director of real estate at Comptroller’s New York office, in a statement.

This is the second joint venture between Hudson and the city pension system. In 2013, all five New York pension funds combined invested $ 500 million in residential and commercial real estate, concentrated in areas damaged by Superstorm Sandy. Hudson was one of the development partners.

This original partnership built two mixed-use apartment buildings – the Lois and the Clark – in Brooklyn, on the border between Prospect-Lefferts Gardens and East Flatbush. In both towers, 30% of the units are reserved for tenants who earn up to 130% of the units Area median income, or $ 108,680 for a single person household based on city data for that year.

The 2013 investment at Hudson had a return of 7.6% in the third quarter of last year, according to pension applications.

– With the support of Martin Z Braun


Comments are closed.