NEW YORK CITY—Henley USA purchased two properties on East 84th Street, between First and York Avenues to establish a new brand, Henley City Living.
Built in 1910, the six-story apartment buildings, located at 409-413 E. 84th Street, comprise 48 units, totaling 31,152 square feet. The apartment was listed in the New York Times in February 2016, with 409-413 E. 84th Street Realty Corp. as the seller.
The write-up noted all apartments were fully occupied, of which 16 were fair-market and 32 rent-stabilized. The listing price was $30 million. Henley USA purchased the apartments for $21 million.
Heavily reported in the news, affordable housing looms large as a growing concern for New York City. Regarding Henley’s first purchases in the New York market, Garrett Solomon, president at Henley USA, tells GlobleSt.com, “We are not targeting super luxury tenants. This product is targeting young professionals, millennials, from which we believe there will always be a significant demand for quality and yet reasonably affordable housing.”
Henley City Living plans to renovate many of the apartments in the six-story walk-ups with new kitchens, new bathrooms, upgraded common areas and building electrical systems, internal wiring for Time Warner cable or Fios options, and rooftop decks. It also plans to connect building access systems to tenants’ mobile phones replacing the traditional intercom systems.
The closing recently occurred on September 29. However the company has already completed the demolition of two vacant units and two additional apartments are in the process of being gutted. Solomon anticipates having 15 to 17 units fully renovated by late December or early January, with future renovations completed as tenant leases expire.
He says the renovations will be mostly finished by the end of 2018, subject to lease expirations. There were 15 vacancies at the September 29 closing and Solomon anticipates another two units becoming vacant at the end of this month. Henley City Living will start pre-leasing units when they are substantially complete.
Solomon notes it is “not at all” the company’s intention or strategy to compete with apartments that offer doorman services, gyms, pools, elevators and lounges.
“We’re simply bringing an institutional approach to an existing asset. It is not uncommon for a long-term owner to stop making investments in assets while they collect cash flow,” says Solomon. “This asset has not seen material improvements in quite some time.” Although not trying to convert the property into Class A buildings, Solomon says Henley can improve basic building infrastructure, and shared and outdoor spaces.
He underscores the target demographic for the Upper East Side properties will be couples, young families, and recent college graduates in roommate situations. Solomon says although the price point remains to be determined, generally speaking, they are looking at a $1,400 to $1,800 per bedroom range.
CEO of Henley Investments, Ian Richwood, says these recent acquisitions represent an attractive value-add investment and “builds on our strategy to identify residential properties in high-demand areas where we can build return through unit renovation.” With this launch of the new sub-brand, Henley City Living, and an extensive pipeline of deal flow, Richwood says the company is on track to doubling its US footprint in the near future.
Henley USA is the US branch of the UK private equity real estate investor that has approximately $1.5 billion assets under management. Henley USA has acquired $100 million worth of assets since mid-July. It has additional acquisition closings in 2017 that will be part of the Henley Living City brand including a residential building in Jackson Heights, Queens, and is negotiating contracts on other buildings in and around Manhattan. Outside of New York City, Henley USA is pursuing assets to bring its total volume of acquisitions by the end of the first quarter of 2018 closer to $250 million.