Global investment manager Invesco Real Estate has bought the majority interest in a Manhattan apartment portfolio valued at nearly $760 million.
The Miami connection? For one, Invesco owns assets locally, including the under-construction Maizon at Brickell rental tower. In addition, Miami attorney Richard Giusto guided the Manhattan deal. The Greenberg Traurig shareholder started representing Invesco 25 years ago and still leads its U.S. real estate deals.
“I know what their procedures are, what they want, what their requirements are, so I oversee and helped structure the deal,” Giusto said. “What we try to do with our national clients is keep that consistency with the lead attorneys but work very closely with the local offices for the local law aspects.”
Invesco, a subsidiary of Atlanta-based Invesco Ltd., bought an 80 percent ownership stake in five apartment buildings from AvalonBay Communities Inc., an Arlington, Virginia-based publicly traded real estate investment trust.
AvalonBay retains the remaining 20 percent interest and manages the new joint venture.
Invesco’s share was worth $608 million in a deal that included recapitalization, new loans and bond financing, Giusto said.
“It’s complicated,” he said. “That’s not just all cash.”
AvalonBay received $470 million in net proceeds from the sale, according to a news release.
Invesco entered the deal on behalf of an undisclosed pension fund.
The portfolio spans trendy New York neighborhoods — Avalon Morningside Park at 1 Morningside Dr. next to Morningside Park in Morningside Heights; Avalon Bowery Place I at 11 E. First St. and Avalon Bowery Place II at 22 E. First St., both in the Bowery; and Avalon West Chelsea at 282 11th Ave. and AVA High Line at 525 W. 28th St., both in Chelsea.
“These are Class A multifamily buildings. They have high occupancy,” said Josh Farrell, a New York-based Greenberg Traurig shareholder who worked on the deal. “They are in well-located neighborhoods, easy access to transportation and amenities.”
Rent increases are expected as a result of a slowdown in New York multifamily construction, said Farrell, who led the contribution-purchase agreement and the joint venture aspects of the deal.
“The short-term and midterm market for rent growth for multifamily properties in New York, especially these areas and in these neighborhoods, is very good,” he said. “There was a lot of new supply on the market in the last few years. The general feeling is that that supply, the new supply, has peaked last year in 2018. New development of these types of properties is expected to dwindle in the next few years. There’s a feeling that these properties in particular are well-positioned for rent growth.”
Rents range from $3,134 for a studio to $6,915 for a three-bedroom unit at Avalon Morningside Park, $4,360 for a studio to $7,450 for a two-bedroom unit at the Avalon Bowery Place buildings, $3,150 for a studio to $6,060 for a two-bedroom unit at Avalon West Chelsea and $2,943 for a studio to $5,406 for a two-bedroom unit at AVA High Line, according to AvalonBay’s website.
The REIT, which builds, buys and manages multifamily properties in prime U.S. markets, developed all five properties from 2006 to 2015.
The multifaceted deal included a portfolio recapitalization.
Miami shareholder Michael Lynott led the securing of $396 million in refinancing, partly from Wells Fargo & Co. and the rest in bond financing from the New York City Housing Development Corp.
Other Greenberg Traurig attorneys who worked on the deal included shareholders Noam Lipshitz in Fort Lauderdale and Marina Ross in Miami and associate Corey Strauss in Miami.
In New York, Greenberg Traurig shareholders Deirdre Carson, Jerrold Goldberg, Steve Mastbaum and Ivy Lapides and associate Karen Geringer worked on the deal.
Law firm Goodwin Procter represented AvalonBay.