Lone Star Sells $472.5M Long Island Portfolio to Fairfield Properties
The private equity firm sold the Class B multifamily assets to Fairfield Properties and FCP a week after selling a $1.1 billion portfolio of MD and VA apartments to the Kushner Companies.
NEW YORK CITY—Fairfield Properties, a major owner of multifamily properties on Long Island, and FCP℠ acquired a $472.5 million, seven-asset portfolio in Nassau and Suffolk Counties. The seller of the property comprising 1,496 units was Rochester-based Home Properties, according to Long Island Business News. That company is owned by the private equity firm Lone Star. This transaction was announced a week after Lone Star sold a $1.1 billion portfolio of more than 6,000 apartments in MD and VA to the Kushner Companies.
FCP℠ invested $100 million in preferred equity in the deal. Freddie Mac and Citibank provided senior loans for the acquisition. The Long Island, NY properties include the following apartment complexes:
*Westwood Village, in Westbury, 242 units, constructed in 1971
*Heritage Square, East Meadow, 80 units, constructed in 1951
*Cambridge Village, Levittown, 82 units, constructed in 1969
*Yorkshire Village, Levittown, 40 units, constructed in 1973
*Mid-Island Apartments, Bay Shore, 232 units, constructed in 1975
*Southern Meadows, Bayport, 452 units, constructed in 1970
*Lake Grove Apartments, Lake Grove, 368 units, constructed in 1972
Fairfield Properties plans to heavily invest in renovating the properties, upgrading interior spaces and exterior common areas.
“We are thrilled to add these multifamily rental properties to the Fairfield family of communities,” said Gary Broxmeyer and Michael Broxmeyer, managing partners of Fairfield Properties in a statement. “The locations fit perfectly into our portfolio. We look forward to upgrading them to the Fairfield standard so we can provide a premier level of service to the residents.”
“FCP is very pleased to make its first investment in the Long Island, NY market alongside Fairfield Properties, the top multifamily owner and operator in the market,” says FCP SVP, E.J. Corwin. “This investment continues FCP’s strategic initiative to expand its structured investment business by providing preferred equity on existing multifamily assets.”
CBRE’s Jeffrey Dunne, Gene Pride and Eric Apfel, along with Alexander Virtue of CBRE capital advisors, represented the owner and also procured the buyers. CBRE’s New York City and Mid-Atlantic debt and structure finance teams placed the debt.
The investment strategy was to buy high quality, Class B assets in markets with high barriers to new construction, with access to diverse employers and strong school systems.
CBRE notes that during the past year the owners had significantly invested in the properties. Thus, the apartments are in excellent overall condition considering their age. The brokerage firms asserts this has resulted in higher-than-average occupancy, continued rent growth and resident retention. The properties have provided quality housing for significantly less compared to rentals in newer buildings, according to CBRE.
“There was incredible interest in the properties, as this class of ‘workforce housing’ is in high demand because of a shortage of quality Class B apartments and the slow pace of new construction on Long Island,” says Dunne. “These factors created an opportunity for astute investors, like Fairfield Properties, to capitalize on strong market fundamentals.”
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