Young guns set their sights on becoming tomorrow’s real estate success stories
The city’s young real estate entrepreneurs are using unique investment strategies to become tomorrow’s success stories.
In some circles, youth correlates with impatience and rash decisions, but these relative newcomers to the fierce and congested New York City market are identifying effective strategies – and valuable assets – and sticking to them.
“Because I’m young, I tend to be a little bit more selective with the properties we invest in,” said 32-year-old Adam Verner, who founded Springhouse Partners in 2010. “It’s very important to me to make prudent investment decisions to be sure that these first few deals are successful.”
Firms like Springhouse Partners focus their efforts on under-utilized and sometimes poorly-run assets, making renovations and bringing in a new set of tenants along with them.
Other firms are sticking to prime, well-known neighborhoods where upside exists in premier locations; while others are focusing on up-and-coming neighborhoods.
Springhouse has acquired $51 million in real estate assets since its inception by securing off market purchases of underperforming assets in the $8 million to $30 million range.
Part of Verner’s strategy is the identification of properties that have been mismanaged, often evident when building vacancies are high or rent isn’t in line with the market, he said.
A screening process of new residents in his residential buildings ensures a “better quality tenancy” with good credit and payment histories, while extensive guy renovations naturally draw tenants in.
At the end of day, what I need to do is provide a quality living standard,” he sai.d “When tenants are happy, you’re not going to have a problem collecting you rents.”
Within a year of setting up shop, Springhouse picked up three buildings in close proximity to Columbia Presbyterian Hospital, totaling 200 residential units and roughly 10,000 s/f of retail.
The firm more recently purchased a newly-constructed 32 unit, 39,000 s/f residential building located at 90-96 Meserole Street in Williamsburg, Brooklyn for $13.75 million; and Springhouse is currently in the process of signing its second Brooklyn contract for $16 million, Verner said.
“We like being near transportation, hospitals and schools. The strong demographics make management not quite as labor intensive, enabling us to focus on satisfying tenants while generating strong cash flow,” he said.
Imperium Capital, founded in 2010 by managing partners Samuel Schneider, 34 and Daniel Glaser, 29, is another young company that’s making headlines in New York City real estate.
Among other acquisitions and leases, Imperium solidified Apple as a tenant at their 103 Prince Street location.
Schneider and Glaser previously worked together at KMG Partners, and later at Eastern Consolidated, where they took lead roles in the closing of deals valued at more than $750 million.
Imperium sticks to prime neighborhoods they know block-to-block and building-to-building, locating undervalued trophy properties, and holding them down for the long haul.
SoHo has been a major focus, where a $20 million renovation by Apple is nearing completion at Imperium’s 103 Prince Street. The 30,000 s/f Building, located in the SoHo Historic District, Apple will increase its retail spaces there by 5,000 s/f.
“We look for properties in world class locations and SoHo is a neighborhood that’s exploded,” Schneider said. But, he added, “It’s been very hard to get our hands on great locations, so if we can buy anything we’re holding onto it for the long-term.”
Among other Imperium holdings is a 16,000 s/f residential loft building at 60 Wooster Street; two neighboring commercial buildings as 161 6th Ave. and 233 Spring Street; and 174-180 north 11th Street, a 16,000 s/f retail and office space in Williamsburg, Brooklyn, another neighborhood the duo is zoning in on.
Other young investors breathing life into neighborhoods that were once overlooked and only more recently have come under the spotlight.
Treetop Development, for instance, a Newark, N.J. based real estate firm founded in 2005 and run by general partners Adam Muemelstein, 33, and Azi Mandel, 34, has purchased a slew of properties in underserved Manhattan neighborhoods.
The firm has recently focused on areas above the Upper West Side, north of 96th Street and up to 135th Street, where rents are still relatively affordable, new construction, redevelopment projects and retail hubs are sprouting, and there’s access to transportation and universities.
“This area has a diverse population and almost has the feel of Williamsburg as a rapidly gentrify neighborhood,” Mermelstein said.
“The New York City market has given real estate investors the opportunity to tap into new markets and we are generally looking at value-added opportunities in area that we perceive to have current value, as well as inherent value for the future.”
The firm recently purchased properties at 1917 7th Avenue, 110 St. Nicholas Avenue, 110 West 116th Street and 120 West 116th Street, consisting of over 80 apartment homes and eleven retail spaces totaling 10,000 square feet.
These transactions are the first of several large portfolio-type deals the firm has planned for the remainder of 2012, Mermelstein said.
Last month Treetop closed on a 12,000 s/f, six-story, 52-unit rental building at 165 West 127th Street in Harlem.
The company, which owns and manages over 3,000 residential homes throughout New York and New Jersey, plans to give the building a similar renovation treatment that their other buildings get, with new electric, plumbing, roofing, and modernized units, with hard floors and new, larger windows, Mermelstein said.
“We don’t just slap a coat of paint on the walls and coat the floors with polyurethane,” he said. “We’re really giving the buildings a higher-end feel than what the area has been used to in the past.”